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Betty’s Bakery
Small Business Manual Accounting & Bookkeeping Practice Set
The Trial Balance Overview
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The Trial Balance worksheet is located in Step 5: Workpapers (5.3). The Trial Balance lists all the accounts in a company's Chart of Accounts and General Ledger along with columns for their respective debit or credit balances. The purpose of a trial balance is to ensure that the total debits and total credits for all the accounts are equal after all the transactions have been entered from the Journals
Work to be Performed
1. Enter the applicable balance from each General Ledger account onto the first two debit and credit columns and add the two columns. The two columns must be equal. Review your Journals and postings to the GL until the two column totals are equal
2. After resolving any discrepancies in 1, copy the Balance Sheet account balances to the two middle columns and copy the Income and Expense account balances to the two right columns and total all four columns. The columns will not be equal. See 3 below.
3. Verify that the difference between the debit and credit columns for the Balance Sheet and Income Statements are the same. This difference is the company’s profit or loss. Remember: the income and expense accounts belong to the owner. This difference between the income credits and the expense debits must be added back to owner’s equity (Retained Earnings) in order to balance the Balance Sheet.
The Bank Statement Overview
A bank statement is a monthly bank-generated document provided to its customers. It is a detailed listing of all the transactions that have occurred on the company’s bank account for the period Bank statements provide information related to deposits, withdrawals, and other money transactions that have taken place in the account, as well as the beginning and ending balance for the period.
Bank statements also support an historical and accurate record of a company’s cash transactions. It is essential and mandatory that the accountant and bookkeeper reconcile the bank balance to the company’s GL checking account balance at the end of every month.
Work to be Performed
The Bank Statement for the company’s first month is located in Section 5 Workpapers (5 4) Remove it from the manual and review it to become familiar with the format and information provided. You will need to refer to the Bank Statement as you complete the bank reconciliation below.
