Trial Balance

Trial Balance Bookkeeping Services

Trial Balance Bookkeeping Services

Trial Balance Bookkeeping Service in NYC and Surrounding Areas

The trial balance is a report your company will use at the end of each reporting period (typically reporting periods are monthly) to confirm the general ledger accounts balance. A trial balance is only necessary if your company uses the accrual method of accounting to record transactions because double-entry booking is required only for the accrual method. Visit our general ledger page for further details on accounting methods.

The trial balance totals the ending balances of all the debit and credit accounts and compares the two amounts to ensure they are equal. Total debits must equal total credits for the trial balance to be considered balanced. The table below lists the type of accounts listed in the trial balance and whether the accounts are a debit or credit transaction:
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Trial Balance Bookkeeping Service in NYC and Surrounding Areas
Trial Balance Review

If the trial balance review identifies a variance between the debit and credit accounts the individual account balances must be reviewed to identify the cause of the variance.
Usually discrepancies are caused by an error in data entry or posting a transaction to the wrong account. We have a terrific accuracy rating but perform trial balance preparation and review services as an additional way to provide our clients assurance in the accuracy of our work.

It’s important to highlight that the trial balance review will not detect transactions that have been posted to the wrong account if both accounts require a debit (or a credit) posting. For example, if revenue from services you provided to a client was accidently posted to another income account, such as interest income, instead of service revenue, the trial balance review would not detect the error because the debit and credit accounts would still be equal.

Also, the trial balance review would not uncover any transactions that were not entered into the general ledger. If an entry is omitted from the general ledger, the debit and credit totals would still balance since each transaction posted to the general ledger requires a debit and credit entry.

For example, if your company made a truck purchase on account but failed to record the purchase in the general ledger, then the truck was never recorded as an asset (debit transaction) nor was the liability recorded for the money owed to the car dealership (credit transaction). Since both the debit and credit postings were omitted, the trial balance review would most likely not catch the omission. An example of a trial balance is shown below:
Sample Trial Balance
Importance of a Trial Balance

The trial balance serves as a way to confirm the mathematical accuracy of the data entered into the general ledger for the period under review. The trial balance is an internal document that provides a certain level of assurance the financial statements are being prepared with accurate information.

The financial statements are typically used internally and externally (potential investors and/or creditors) so it is extremely important to have up-to-date and accurate figures.

The trial balance is prepared at the end of each month typically as part of the closing process to ensure all transactions have been posted to the general ledger and is prepared before the income statement and balance sheet. 

Many people confuse the trial balance with the balance sheet. The balance sheet is a financial report that lists the company’s financial position including assets, liabilities, and equity accounts. The balance sheet allows your company’s management to monitor business performance which facilitates better decision making. Similar to how debits must equal credits in the trial balance, assets must equal liabilities plus equity in the balance sheet for the report to be considered balanced. 

The trial balance preparation and review services can be added to an existing service package. We can also provide review services to companies who prepare their own bookkeeping records but would like a qualified Accountant to perform a cursory review before preparing your company’s financial statements.  We strongly encourage taking advantage of the trial balance preparation and review services because it’s much easier to detect an error proactively then to undo an error once the financial statements have been prepared.

Contact AKS Bookkeeping Services

Please contact us today for a free consultation and learn how we can help you manage your business with our trial balance preparation and review services.
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