Trial Balance Template in Excel, OpenOffice Calc & Google Sheet to prepare closing balance statement of ledger accounts for the final accounts.
Moreover, this template consists of 3 types of Trial Balance templates: Simple Trial Balance Template for SMBs and Corporate Trial Balance Template and Consolidated Trial Balance.
Just insert the closing balances of each ledger account at the end of the accounting period. If your statement is balanced, the template displays “Balanced” and if not it displays “Error”.
In this article, we will discuss trial balance in detail. Definition, Types of trial balance, uses of trial balance, advantages, disadvantages, types of errors, etc.
Table of Contents
Download Trial Balance Template (Excel, OpenOffice Calc & Google Sheet)
We have created a simple and easy Trial Balance Template with predefined formulas and functions. Just insert closing balances of ledgers at the end of the accounting period and your trial balance is ready.
Download your desired format and start using it.
Moreover, you can download other accounting templates like Sum of Years Depreciation Calculator, Straight-Line Depreciation Calculator, Declining Balance Depreciation Calculator, Profit & Loss Statement Template, and Balance Sheet Template, etc.
Additionally, you can download other HR templates like Paycheck Calculator, Payroll Template With Attendance, Salary Slip Excel Template India, Simple Salary Sheet, and Employee Salary Sheet depending on the company requirement.
Feel free to contact us for the customization of this template as per your requirement. We also design new templates based on your needs. You can hire us for our services on Fiverr or directly contact us at info@msofficegeek.com.
How to use Trial Balance Template?
This template consists of 3 Trial Balance Templates: Simple Trial Balance for SMBs, Corporate Trial Balance, and Consolidated Trial Balance.
Insert Company name. insert the date of preparation. Follow the below-given steps to prepare the trial balance.
1. Insert debit and credit closing balances of ledger accounts against the respective items.
2. Check the status “Balanced” or “Errors”. If it shows an error means it hasn’t balanced. Thus look for errors in the ledger and journal entries of the respective accounts.
3. Rectify the errors and then prepare the adjusted trial balance.
Simple Trial Balance Template For SMBs
This template is a basic version for small and middle-sized companies where the volume of transactions is less and has less ledger classification of ledger accounts.
Corporate Trial Balance
A corporate trial balance consists of many accounts as the volume of transactions is higher. Moreover, corporates also have many ledger accounts.
Consolidated Trial Balance
Consolidated Trial Balance is the same as the corporate trial balance. The only difference is that it consists of multiple columns to record trial balance entries from multiples locations or branches of the same company.
Companies having multiple branches or sale outlets across the globe can use a consolidated trial balance.
If your statement is balanced, the template displays “Balanced” and if not it displays “Error”.
What is a Trial Balance?
The Trial Balance is a statement of debit and credit closing balances of all ledger accounts at the end of the accounting period. It is used to identify the mathematical accuracy of entries made in the double-entry system of accounting.
In simple terms, a trial balance is a preliminary report that displays the total of ledger accounts viz; assets, liabilities, income, costs, and capital, as at a specific date.
It is prepared for final accounting at the end of the accounting period. Although, many companies with higher volumes of transactions prepare it periodically. This lessens the burden of error rectifying at the end of the year.
Preparing a trial balance statement is the first and foremost step towards closing accounts at the end of the year. The Financial statements like Cash Flow Statement, Balance Sheet, Profit, and Loss Account Statement, etc include the closing balances from Adjusted Trial Balance.
Line Items in a Trial Balance
A trial balance includes the following line items:
Petty cash
Bank – Checking Account
Bank – Savings Account
Accounts Receivable
Allowance for Doubtful Accounts
Inventory
Prepaid Insurance
Prepaid Expenses
Office supplies
Utility Deposits
Notes receivable
Investments
Company Vehicles
Furniture and fixtures
Equipment
Buildings
Accumulated Depreciation
Vehicles
Furniture and fixtures
Equipment
Buildings
Land
Goodwill
Accounts Payable
Sales Tax
Withholding Taxes
Federal
State
FICA taxes payable
FUTA taxes payable
Accrued Salaries
Credit Card
Bank Loans
Notes payable
Owner’s Equity
Owner’s Drawings
Additional paid-in capital
Revenue
Sales
Other Revenue
Unearned revenue
Investment income
Gain/Loss on sale of assets
Advertising
Amortization
Bank charges
Charitable contributions
Commissions expense
Credit Card Fees
Interest expense
Maintenance & Repairs
Permits and licenses
Professional fees
Property taxes
Rental Expenses
Most items have been taken into account in the above list. You can add or delete as per your need.
What is the Purpose of a Trial Balance?
The main purpose of the trial balance is to check the arithmetical accuracy of the account balances. Sometimes, there are human errors like typographical errors or errors of reporting in the wrong ledger account. Thus, it helps to identify and rectify them by passing adjustment journal entries.
It assists in preparing financial statements. As it consists of all the accounting balances from the ledger, it becomes easy to get it from one statement. This saves time for accounting professionals.
Furthermore, a trial balance is helpful in comparative analysis. You can compare balances of the current year with the past year’s balances. This assists the management in taking important decisions. It also helps to recognize the trend.
In addition to that, it helps the auditors to identify loops in the financial statements. This helps them to prepare reports. It also helps in the preparation of the financial budget by viewing expenses in the current year’s ledger accounts.
Types of Trial Balance
There are 3 types of trial balance: Unadjusted, Adjusted, and Post-closing. Moreover, these types are defined based on the time of preparation of the trial balance statement.
Unadjusted Trial Balance
First of all, the accountant needs to extract and enter all the closing balances of the ledger accounts in the trial balance. This is called an unadjusted trial balance.
In simple terms, an unadjusted trial balance is prepared to verify that the debit balances of ledger accounts are equal to credit balances.
Adjusted Trial Balance
After preparing an unadjusted trial balance, the accountant needs to post-adjustment entries in respective ledger accounts to rectify the errors. The accountant again prepares the trial balance after making adjustment entries in the ledger accounts.
This statement is called adjusted trial balance. The accountant further uses the adjusted trial balance to prepare the financial statements. Once the financial statements are prepared, the same is used as a post-closing trial balance.
Rules of Trial Balance
1. Assets must be put on the debit side.
2. Liabilities must be put on the credit side.
3. Income or gain must be recorded on the credit side.
4. Expenses must be recorded on the debit side.
Steps to Prepare Trial Balance
There are 3 steps to prepare a trial balance:
- Match General ledger with respective receipts to check for missing or wrongly reported entries.
- Balance ledger accounts.
- Extract debit and credit balances of ledger accounts.
- Insert credit and debit balances into the trial balance statement.
Errors in Trial Balance
There are multiple types of errors in the trial balance. Some are easily rectifiable and some are hard to find. Thus, we have prepared a detailed classification of errors to help you easily identify and rectify trial balance errors.
Arithmetical Errors
Arithmetical errors can be of multiple types. They will be either reporting amounts in the wrong account, or else they will be typographical errors.
Wrong Posting Errors
When an accountant enters amounts on the wrong side, it causes a difference of double the amount. Such errors are known as wrong posting errors.
It can be any of the following:
- Wrong posting of transactions to the ledger.
- Wrong totaling of accounts.
- Unbalancing of accounts.
- Wrong recording of the amount in the journal or the day books.
For example, an entry made for a particular amount on the debit side instead of the credit side. Look for the solution to rectify such errors in the next section.
Transposition Errors
Transposition means changes in the position of the numbers. There are chances of digits being recorded in a different order.
For example, $1254 and $1245. Look for the solution to rectify such errors in the next section.
Transplacement Errors
Transplacement means shifting of decimals. While making entries in a hurry, there are obvious chances that we insert decimal points at the wrong place.
For example, reporting $ 23.5 as 2.35. Look for the solution to rectify such errors in the next section.
Omission Errors
Usually, Omission errors occur while recording transactions in the journal, subsidiary books, or while posting to the ledger. Omission means leaving out. In simple terms, those entries which the accountant forgets to make.
These errors can be wither of complete omission or partial omission.
For example, if an accountant forgets to make the entry it is a complete omission. Whereas, when an accountant records the transaction in the subsidiary book and forgets to post it to the ledger. Such errors are partial omission errors.
Compensating Errors
Often, there are circumstances that the effect of one transaction gets neutralized by another error with the same amount on the other side.
As both the debit and credit side’s total match with similar amount errors. Thus, the effect of such errors is nil. In simple terms, when the effect of errors committed cancels out such errors are compensating errors.
For Example, the account reports a creditor’s amount of $ 5000 wrongly as $500. This reduces the trial balance by $ 4500. At the same time, he reports a receipt from another creditor of $5000 as $500.
Thus, the $4500 of the debit side and credit side matches. Hence, the trial balance doesn’t display the error.
Accounting Principle Errors
Accounting principle errors are those errors in which an account is reported to the wrong account. Although the entry made is the same on both the debit and credit sides, there is a violation of the accounting principles.
For example, the accountant treats the purchase of an asset as an expense. Such errors occur when accountants are freshers or do not have a good understanding of accounting concepts.
Unknown Errors
Often, some errors are unknown and cannot be found. In such cases, the accountant needs to make an entry of the difference amount to the Suspense Account.
Later on, when the error is known, the accountant passes an entry to the suspense account to close it.
Rectification of Errors in Trial Balance
When you have errors, here are some solutions that can help you easily locate and rectify the errors.
- Sometimes the accountant records the transaction on the wrong side. To rectify such errors, you need to divide the difference between the debit and credit column by 2. If you can find such an amount in the trial balance, it means the amount was recorded on the wrong side.
- To rectify transposition or transplacement errors, divide the difference between both the side of trial balance by 9. If they are divisible by 9, then there are chances of such errors. Check those ledger accounts properly and rectify such errors. Transposition and Transplacement errors are explained above in the errors section.
- Omission errors can be rectified by finding the entries and posting them to the right account by making adjustment entries.
- To rectify compensating errors, identify the errors, reverse the entries and then insert the correct adjustment entries for both the transactions.
- For accounting principle errors, it is difficult to identify such errors. You need to reverse the entry and report the transaction under the correct ledger account.
Frequently Asked Questions
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