Trial Balance

Trial balance is a listing of account balances in a ledger. Trial balances are used to see if the dollar value of the accounts with debt balances is equal o the dollar value of he accounts with credit balances.

Steps of making a trial balance:
Step 1: Write a heading, trial balance and the date
Step 2: List all the accounts and their balances
Step 3: Place the debit balances in a debit column and the credit balances in a credit column
Step 4: Add up the column
Step 5: Double check if the columns total are the same, if yes then double underline and a rule line on top, if the columns do not add up then try to find your mistake

Debit or Credit?

When you have assets increase it would be debit, a decrease in assets it would a credit. A decrease in liabilities is a debit and an increase in liabilities is a credit. As for owner’s equity or capital it is the same as the liabilities. Debits on the left and credit on the right. The beginning values of liabilities and capital are placed on the right side (credit side) As for assets, the beginning value is placed on the left side (debit side).