Section 3 Preparing a Trial
Balance
What You’ll Learn
 The purpose of a trial balance.
 How to prepare a trial balance.
 How to identify and locate trial
balance errors.
Section 3 Preparing a Trial Balance (cont'd.)
Why It’s Important
To present accurate financial
statements, the accounts must be in
balance. The purpose of a trial balance
is to prove that the general ledger is in
balance.
Key Terms
 proving the ledger  slide error
 trial balance
 transposition error
 correcting entry
Section 3 Preparing a Trial Balance (cont'd.)
The Fifth Step in the Accounting
Cycle: The Trial Balance
 A formal way to prove that debits
equal credits is to prepare a trial
balance.
 Prepared on two-column
accounting stationery.
 Account numbers are listed in the
far left column.
Section 3 Preparing a Trial Balance (cont'd.)
The Fifth Step in the Accounting
Cycle: The Trial Balance (cont'd.)
 Account names are listed in the
next column.
 Debit balances are entered in the
first amount column.
 Credit balances are entered in the
second amount column.
Section 3 Preparing a Trial Balance (cont'd.)
The Fifth Step in the Accounting
Cycle: The Trial Balance (cont'd.)
Section 3 Preparing a Trial Balance (cont'd.)
Check Your Understanding
What is the purpose of a trial
balance?