Trial Balance Sheet Template

First of all, let's take a look at the Double-entry system's basic mechanism. The double-entry system consists of two entries which verify each other. The process of a double-entry system starts at a journal, proceeds to ledger (also known as a T-Account format) and ends with the final accounts. This cycle is often termed to be one accounting cycle. The trial balance sheet is essentially considered to be a part of the final accounts of the business. Due to the simplicity and logical working of the system, the entire world of accounts and finance is based upon this system and though there are small modifications which have been made in due course of time, the basic mechanism of 'accounting cycle' has still remained the same. Bookkeeping of the accounting cycle and the preparation of a trial balance can be done at any time interval, it can be done everyday, once a week, a month, a quarter, after every 6 months, or annually. It is up to the business organization. In fact, some very big organizations operate the cycle, almost daily.

So Where Does the Trial Balance Come in?

After the ledger accounts are prepared, there is a final balancing figure which is obtained. This balancing figure is then put into the trial balance. After the trial balance is made, the preparation of final accounts is taken up. The final accounts consist of 3 sub-accounts, namely, the trading/production account, a profit and loss account/income and expenditure account and a balance sheet.

1. The trading/production account is prepared first, where information or monetary figures that are related directly to the economic or business activity of the firm are processed to derive the Gross Profit/Loss, which is transferred to profit and loss account.
2. Next, the profit and loss account is prepared to process and include the incomes and expenditures of the firm, which are not included in the trading/production account. The elements and balances from the trial balance are used to process and derive the Net Profit/Loss, which is then forwarded to the balance sheet.

Thus, the trial balance acts as a connecting bridge between the vast ledger books and the final accounts, also serving as the basic data on which the final account is based and is processed.

(Note: Please take into note that the term ledger book also includes some hybrid books, such as, cash books, purchase and sales books and even petty cash books.)

Template of Trial Balance Sheet

Account Name	Debit	Credit
1. Capital Accounts: Capital General Reserve Share Dividend Bonds Payable Debentures Payable Instruments and Securities	-	Xxx
2. Long-Term Liabilities: Bonds Payable Secured Loans Securities Payable Long-Term Loans	-	Xxx
3. Current Liabilities: Interest and Return on Investment Payable Accounts Payable Creditors Unsecured Loans Short-Term Loans	-	Xxx
4. Fixed Assets: Building and Premises Furniture and Fixtures Logistics and Transport Equipment Machinery	Xxx	-
5. Current Assets: Loans Receivable Accounts Receivable Debtors Investments Interest and Return on Investments Receivable Inventory Raw Materials Work-in-Progress Cash At Hand Cash At Bank	Xxx	-
6. Trading/Production Account: Sales Purchases Closing Stock Opening Stock Carriage Inward Carriage Outward Work-in-Progress	Xxx	Xxx
7. Expenses: Salaries Depreciation on Assets Interest and Returns Paid Stationery and Office Supplies Consultancy and Legal Charges Taxes and Duties General Charges Power and Fuel Liabilities Paid off Loan Installment Interest on Capital	Xxx	-
8. Income: Interest and Returns on Investment Accounts Received Debtor's Payments Income from Sale of Assets Accrued Interest and Returns	-	Xxx
9. Total	Xxx	Xxx

Take into note that the trading/production category contains all incomes, expenses, assets and liabilities. Hence, their monetary figures can be recorded on both debit and credit side. There is also no compulsion to make the segregation of the entries; this trial balance sheet contains segregation, for the sake of convenience. You can also modify and add to the aforementioned template.

Some Rules of Thumb for the Preparation of Trial Balance Sheet

The following are some common rules which you can follow while transferring the balances from ledger books to the trial balance sheet.

• In a trial balance sheet, the assets are to be recorded to the debit side.
• All the liabilities on the other hand go to the credit side.
• Expenditures go to the debit side and incomes go to the credit side.
• In order to tally the final balance sheet, one can use the formula: Assets = Liabilities + Owner's Equity

Apart from these, the normal rules of accountancy apply when you transfer the ledger balances to the trial balance.

Now it goes without saying that caution and care needs to be exercised while preparing the trial balance, as one single mistake disrupts the balance sheet and it eventually becomes faulty and is rendered useless. Modern financial software and programs usually enable the creation of trial balance and subsequent final accounts on a basis which is as regular as everyday.