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BTEC National Business
Unit 8 – Investigating Accounting Systems
Pass 4 – Describe how a trial balance is extracted from a set of accounting records

1
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A double entry record keeping system is needed because each transaction affects two of the items
on the businesses balance sheet
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In recording every transaction carried
out, the business would know exactly what has been spent and how much has been received
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2
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At the end of an accounting period, accounts are balanced off by:


Adding up the greatest value on the side of the account

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Adding up the other side of the account

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Deduct the smaller total from the larger total, with the difference between the two being the
balance



The side with the balance which is smallest in value is entered, which is called the balance
c/d, meaning that the balance is to be carried down
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Both totals must be level since the differences
between the two sides have added to the smaller side so both sides are equal
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3
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A trial balance is arranged in two columns, debit balances or credit balances
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The debit
balances should be equal to the credit balances, so in ledger accounts, each debit entry has a
corresponding credit entry, with a trial balance being carried out as a check
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I both totalled agree, it’s a good indication
that the ledger accounts are right
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At the end of each month, a trial balance is usually drawn up
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In case a mistake is found, it is identified as the
current month’s error
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