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Trial balance

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The trial balance, errors and suspense accounts The trial balance Once the ledger accounts have been balanced off, the closing balances are summarised on a list called trial balance. The debit and credit balances are summarised in different columns where the totals of debit and credit balances should agree and an investigation should be carried out in case they don’t agree. This is a control in the accounting system to ensure that balances reported in financial statements are accurate. Trial balance layout Dr Cr $ $ Revenue X Purchases X Administrative expenses X Non-current assets X Trade receivables X Cash X Share capital X Loans X Trade payables X X 3. The process of preparing financial statements X 1. Transactions recorded in ledger accounts 2. Ledger accounts balanced and closed off 3. Trial balance extracted 4. Year-end adjustments made and ledger accounts closed off 5. Trial balance used to prepare financial statements. Test your understanding 1 Gateway Ltd sets up a company and in the first nine days of trading the following transactions occurred 1 January They issue $10,000 share capital for cash 2 January They purchase goods for $4,000 and pay by cheque 3 January They buy delivery van for $2,000 and pay by cheque 4 January They purchase $1,000 of goods on credit 5 January They sell goods for $1,500 cash 6 January They sell all remaining goods for $5,000 on credit 7 January They pay $800 to suppliers by cheque 8 January They ...
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