Rules of Trial Balance - SS1 Accounting Lesson Note
To create a trial balance, accountants must follow a set of rules to record and balance the transactions in the general ledger. By following these rules, accountants can create a trial balance that accurately reflects the company's financial transactions and helps to ensure the accuracy of further financial statements. The following are the rules of the trial balance, and they include:
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Every transaction must be recorded in the general ledger with at least two entries, a debit and a credit. Debits must be recorded on the left side of the account, while credits must be recorded on the right side of the account.
Every transaction must affect at least two accounts, with one account being debited and another account being credited. The total amount of the debits must always equal the total amount of the credits.
All accounts must be listed in the trial balance, including assets, liabilities, equity, revenues, and expenses. Each account must be listed with its name and balance.
Debits and credits must be recorded in the trial balance in the same order that they appear in the general ledger. This ensures that the trial balance accurately reflects the accounting records.
The trial balance must be prepared at the end of an accounting period, such as a month or a year, to ensure that all transactions have been recorded and to identify any errors or discrepancies that may have occurred.
The trial balance must be checked for accuracy and completeness. The total of the debits must equal the total of the credits, and all accounts must be included.
If the trial balance does not balance, it indicates that there is an error in the accounting records. The accountant must investigate to find and correct the error before proceeding with further financial statements.