ZIMSEC O Level · Principles of Accounts · Form 3
A trial balance lists all ledger balances at a date in two columns. If double entry is correct, the totals agree.
Debit and credit balances
- Debit: assets, expenses, drawings, purchases, sales returns.
- Credit: capital, liabilities, sales, purchases returns, income (e.g. rent received, discount received).
Worked example: Prepare a trial balance from: Capital 10 000; Equipment 6 000; Bank 3 500; Purchases 4 000; Sales 7 000; Wages 1 500; Payables 1 200; Receivables 3 200.
Debits: Equipment 6 000 + Bank 3 500 + Purchases 4 000 + Wages 1 500 + Receivables 3 200 = 18 200
Credits: Capital 10 000 + Sales 7 000 + Payables 1 200 = 18 200
Errors the trial balance does not show
- Omission (left out completely), commission (wrong person's account), principle (wrong class of account), original entry (wrong amount in both), complete reversal, compensating errors.
Exam tip: Agreement of the trial balance does not prove the books are free of errors.
Check yourself
- Is “discount allowed” a debit or a credit balance?
- Name two errors not revealed by a trial balance.
- Is “purchases returns” a debit or a credit balance?
Show answers
- Debit (an expense).
- Any two: omission, commission, principle, original entry, complete reversal, compensating.
- Credit.
Questions about this topic (0)
No questions about this topic yet.
Sign in or create a free account to join in.