How to Adjust Entries on a Trial Balance in Accounting
A trial balance is a representation of a company's entire general ledger. The report ensures that all assets equal liabilities and owner's equity. In short, the report fulfills the accounting equation. Entries are necessary to adjust the accounts on the trial balance. These entries ensure the accounting books are up-to-date and all transactions have representation on the trial balance. From the trial balance, accountants will prepare financial statements for the current accounting period.
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Instructions
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Create a trial balance. List the account number, account name and final account balance for each account in the general ledger. The report can include other information as necessary for accountants to complete the adjusting entries.
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Identify accounts that need updating. Common accounts include revenue, expense and dividends, i.e. the company's temporary financial accounts.
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Write entries to balance accounts or enter final information into the general ledger. Each entry will need to debit and credit an account. This ensures the trial balance will continue to meet the accounting equation requirements.
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Prepare an adjusted trial balance report after posting all entries. This updated report should include all information necessary to prepare accurate financial statements.
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Tips & Warnings
Accruals and deferrals are among the most common adjusting entries. Accruals post transactions that will occur in the future into the current period. Deferrals remove information from the current accounts and place them into an account a company will recognize in a future period.
