TRIAL BALANCE YEAR 01

LECTURE 2 – AE 112 SEM 01

The accounts in the chart are usually arranged in

the following order: assets, liabilities, equity,
THE ACCOUNT
revenues, gains expenses, and losses.
An account is an accounting device used to
record increases and decreases in the different
elements of accounting caused by the business Example of an Account Coding System
transactions that have transpired.
It is a means of accumulating in one place all the
A systematic account coding system can be used
information about changes in specific financial
to indicate the nature or sub-classification of each
statement items.
account as well as the department or the unit that
It consists of three parts: the account title, the left is responsible for the account.
or debit side, and the right or the credit side.

THE ACCOUNTING CYCLE

T-ACCOUNT
The accounting cycle begins with the initial
- a simple and direct means of recording recording of business transactions and concludes
transactions. with the preparation of a complete set of formal
financial statements.

CASH The term cycle indicates that these procedures

Debit Credit
(Left Side) (Right Side)
ACCOUNT BALANCE
The account balance is the difference between
the total amount debited and total amount
credited to an account.
If the total debited amount is greater than the total
credited amount, the account balance is said to
be a Debit Balance. This is normally the case for
assets, drawing and expenses being accounts
having normal debit balances.
must be repeated continuously to enable the
business to prepare new, up-to-date financial
statements at reasonable intervals.
The accounting cycle consists of a series of steps
and procedures performed in a systematic
manner within one accounting period which is
normally one year.
MAJOR PHASES:
Phase 1 – Recording and Classifying process
(During the Accounting Period)
Phase 2 – Summarizing and Reporting process
(At the end of the accounting period)

If the total debited amount is lesser than the total Phase 3 – Closing process
credited amount, the account balance is said to (At the end of the accounting period)
be a Credit Balance. This is normally the case for
liabilities, capital and income being accounts
having normal credit balances.
Reversing Entries are done after the preparation
of the post-closing trial balance.

THE CHART OF ACCOUNTS

The chart of accounts is a list of accounts and
their account numbers that are used in the
business. It is used as a guide for the bookkeeper
in recording transactions.
TRIAL BALANCE YEAR 01
LECTURE 2 – AE 112 SEM 01

TRIAL BALANCE
A Trial Balance is a test to ensure that this
equality exists. a built-in accounting device that is
prepared as of a certain date, usually at the end
of the month, to test the equality of the debit and
credit balances of the ledger accounts after
completing the journal entries and ledger
postings.
It is a control tool that helps find certain clerical
errors committed in the recording and posting
processes.