How to Analyze Accounting Journal Entries to Make a Trial Balance

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The accounting cycle includes several steps accountants follow to record and report a company’s financial information. Making journal entries that adjust accounts and running a trial balance are two tasks that fall under the steps to close a company’s books. Journal entries update general ledger accounts. The trial balance reports all accounts in the general ledger to ensure all debits equal all credits. Posting adjusting entries ensures all accruals and deferrals have proper representation in the general ledger.

Review all accounting journal entries posted in the general ledger for the month. Each entry should have paper documentation to prove the entry’s accuracy and validity.

Make notes on journal entries that need correction. An adjusting entry will be necessary to correct general ledger accounts.

Write adjusting entries. Review the documents from Step 2, and write an entry that will debit and credit two accounts to correct financial information.

Post the entry from Step 3 as written.

Prepare the trial balance. List all general ledger accounts in order. Include the final balance for each account on the report.

Total all asset, liability and equity accounts. According to the accounting equation, assets should equal liabilities and equity accounts.

Tips & Warnings

  • If the trial balance fails to verify that all debits equal all credits, more research is necessary to determine where the error exists. This can take several minutes or several hours.

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References

  • "Intermediate Accounting"; David Spiceland, et al.; 2007
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