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Chapter 4

Preparing the trial balance

2.1 Trial balance

One way of checking the accuracy of the ledger entries is by listing the balances on
each account, and totalling them. Because of the ‘double-entry’ principles applied
when recording transactions, the total of all the accounts with debit balances should
equal the total of all the accounts with credit balances. This list is known as a trial
balance.

Note that the accounts with debit balances are either assets or
expenses, whist the accounts with credit balances are liabilities,
capital or income accounts. The only exception to this is drawings
which represent a reduction in capital.

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