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BALANCING OFF THE ACCOUNT AND THE TRIAL BALANCE - Coggle Diagram
BALANCING OFF THE ACCOUNT AND THE TRIAL BALANCE
BALANCING OFF THE ACCOUNTS
STEPS IN BALANCING OFF ACCOUNTING
add up and total both sides of an account.
placed on the side of the smaller total as the balance carried down ( balance a/d )
balance brought down ( balance b/d ) same figure as balance but recorded on the opposite side of an account
balancing is done by recording the same amount on the opposite side
DEBIT BALANCE
*all assets and expenses account will have a debit balance
CREDIT BALANCE
under normal circumstances , capital , liabilities and income accounts will have a credit balance
ZERO BALANCE
the total debit of an account is equal to the total credit the account will have zero
TRIAL BALANCE
FORMAT OF A TRIAL BALANCE
STEPS IN THE PREPARATION OF A TRIAL BALANCE
state the name of the business and the title
accounts having debit balance are listed in the debit column.
the amount in each of the column is then totalled
OBJECTIVE OF THE TRIAL BALANCE
it checks the arithmetical accuracy of the double entry rules used,
it helps to detect errors within a given time period
it helps facilities the preparation of financial statement
ERRORS IN THE TRIAL BALANCE
a) errors affecting the trial balance agreement
b) errors not affecting the trial balance agreement
Errors affecting the trial balance agreement
5 types of errors affecting the trial balance
SINGLE ENTRY
only one aspect of a transaction is recorded.
ERROR OF TRANSPOSITION
figures are written in the wrong order, that is debiting and crediting the accounts with different amount.
ERROR IN ADDITION
the debit and credit sides of an account are totalled. it will lead incorrect balancing figures.
POSTING TO THE INCORRECT SIDE OF AN ACCOUNT
the debit or credit entry of a transaction is posted to the wrong side of an account. as a result , there are two debits or two credits for a transaction
ERROR IN THE TRIAL BALANCE
transferring account balances from the ledger to the trial balance
ERRORS NOT AFFECTING THE TRIAL BALANCE AGREEMENT
ERROR OF OMISSION
entire transaction has not been recorded or a transaction is completely omitted from the books of account
ERROR OF COMMISSION
the correct amount is posted into a wrong account of the same category of accounts
ERROR OF PRINCIPLE
amount is posted into an account of a different category
COMPLETE REVERSAL OF ENTRIES
the amount and the accounts are correct but each item is shown on the wrong side of the account.
COMPENSATING ERRORS
the debit side is compensated by an error of equal amount on the side. the error cancels out each other. it involves two or mor errors
ERROR OF ORIGINAL ENTRY
made in the books of original entry ( journals )