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The trial balance is a summary of all the transactions of the company for the accounting period, usually twelve months.  It is the key document that links all the records of the company to the accounts. To prepare one, download the extended trial balance spreadsheet in the Preparation of Accounts section and edit the detail as applicable to your business.

The trial balance can be prepared using spreadsheets or software packages such as Sage, and is used to prepare the annual statutory accounts and monthly/quarterly management accounts. Once you hand your trial balance to a Chartered Accountant, it is usually coded into a spreadsheet by the accountant, or a software package such as Viztopia or Caseware, which produces annual accounts for filing automatically from the trial balance. The annual accounting journals are added.  In a spreadsheet, they appear in a separate column extending the spreadsheet to produce the final trial balance which can be automatically linked into the statutory financial statements.

A working paper file is produced by an accountant to support the figures in the trial balance, as a permanent company record. Clients of accountancy firms never see this file as accountants keep it for their records of work performed for clients. It is a good idea to prepare a file for accountants, and ask them to supply the adjustments once they have completed the accounts, as these adjustments need to be posted on the internal software of the company, so that the final accounts agree to the opening balances of the accounting records for the following year. It will also save money on accounts preparation fees, as the highest portion of costs charged by accountants is the labour for preparation of the extended trial balance, statutory financial statements and the year end file. This is true for companies who require an audit and those that do not.

The notes below set out the procedures to follow, but the downloadable spreadsheet mentioned above is the best example to follow. 

  1. Print the trial balance that lists a year to date total of each major class of receipts and payments of your business for the current year and the prior year.
  2. The extended trial balance below summarises how the software has merged the data you have entered to create the trial balance. Use it to find the source of errors that may have occurred if your accounts do not reconcile to the supporting documents in the trial balance column of our summary below.

Note on VAT
Gross includes VAT. Net is before VAT is added on. If your business is not registered for VAT or there is no VAT due on the sale or expense, then VAT is ignored and net will be the same amount as gross. All amounts in control lines are gross.
Checklist
  1. Ensure the trial balance total is zero, so that the debits equal the credits. If they do not, your software has not been set up correctly and you should contact the supplier of the software or your accountant to correct the error before any further work is prepared.

  2. Agree customer control to the debtor's aged analysis that has been agreed to the customer statements.

  3. Agree supplier control to the creditor's aged analysis that has been agreed to the supplier statements.

  4. Agree a credit VAT balance in the trial balance to your payment due to the Vat office and a debit VAT balance to the receipt you expect from the VAT office for the period, whichever case is relevant.

  5. Agree the bank line in the trial balance column to the cashbook total of the bank summary.

  6. Each spreadsheet column below refers to a source document and shows the entries that are made to create the trial balance.  The final column shows what the closing trial balance figure should agree to or represent.  Ensure that the debits and credits in each column equal zero, so that all the debits = all the credits. Enter credits with a leading minus and debits as a positive figure

 


Sales

 Receipts

 Expense

Bank

Cash

 

Turnover

Cr(Net)

 

 

 

 

Agree to sales list net (Cr)

Direct costs

 

 

Dr net cost

 

 

Agree to purchase list net (Dr)

Light & Heat

 

 

Dr net cost

 

 

Agree to purchase list net (Dr)

Prof fees

 

 

Dr net cost

 

 

Agree to purchase list net (Dr)

Tools

 

 

 

Dr net cost

Dr net cost

Agree to bank payments net (Dr)

Wages

 

 

 

Dr Gross plus Eer's NI from payrol (no VAT)

 

Agree to bank payments net (Dr)

Cleaning

 

 

 

 

Dr net

Agree to cash payments net (Dr)

Trains

 

 

 

 

Dr net

Agree to cash payments net (Dr)

Bad debt

 

 

 

 

 

Money owed to you (Dr)

Customer control

Dr

gross

Cr (From   customers)

 

 

 

Agree to money owed to you (Dr)

Supplier control

 

 

Cr (gross)

Dr Gross paid to suppliers

 

Agree to money owed by you (Cr)

VAT   control

Cr(VAT)

Cr (From VAT office)

Dr VAT

Dr VAT

Dr VAT

Agree to VAT received (Dr) or paid (Cr) after the year end

Bank control

 

Dr (from bank statements and deposit books)

 

Cr (from bank statemetns)

 

Agree to cashbook balance on bank reconciliation in extended trial balance

Cash control

 

 

 

Dr gross Cash drawn

Cr (Gross)

Agree to cash left over (ETB)


 
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Fred  - Text wider than the window   |82.35.167.xxx |2012-08-22 03:11:35
Hi! Very useful stuff but, unfortunately on this page the text is wider than
the available window and, without a horizontal scroll bar, there is no way to
read it. Maybe something to do with the table at the bottom of the
page.

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