How do you Balance a "trial balance" with opening balances?

Question

While preparing a trial balance, one should add all opening balances- for eg: opening balance of fixed assets, As we all know a trial balance is prepared to check the accuracy of current year's transactions. As we follow double entry principle, figures on both side of the trial balance will be equal. But when you add figures as stated above, may cause both sides not equal, how will you adjust this?. Where will corresponding entries go?.

Answer 1

1. During a trial balance, you must add/subtract any adjustments from the ledger that weren't posted when the balance was totaled.

2. If the sides aren't equal, your entries (Cr/Dr) aren't equal. When I do it on Excel, I make each pair of entries a different color so I can see that my dr match my credits.

Sometimes there are 2 entries for a figure- accts rec has a cr and a dr, so you have to make sure the unusual cr is attached to something.

I find the color system works well, even with pencils. That way you can see for each dr you have an equal cr.

Answer 2

Group your trial balance into 2 groups.  Balance Sheet accounts  and Nominal or P&L account

On a working paper, summarize your balance sheet accounts into one column and your P&L accounts into another.

your balance sheet column should be like this (Total Assets = Liabilites + Capital) wherein Capital = beginning balances + current year's Income or Loss)

Your P&L should be: Total Sales - Total Cost/Expenses = Income or (Loss)

Answer 3

You should check your opening balance first to determine its accuracy since only real accounts were carry forward to the next balance sheet accounts since all income and expense accounts were closed to capital account or retained earnings.

Since you are doing a double entry, you can trace for any unposted accounts from your journal entries to trial balances.  The most common errors for not making it right is either you have an incorrect beginning balances, unposted accounts, transposition or transplacement of figures, error in posting the debit and credit accounts, and omission of entries from a compound entries.