Unit 4 - Trial Balance

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All financial transactions in a business are categorized. Each category is referred to as an "account" or "a/c".


TMZ Ltd sold $500 of goods in cash to a customer.

The accounts affected here are:

Sales account and Cash (in hand) account.

The company paid the electricity bill of $300 via cheque.

The accounts affected here are:

Electricity account and Cash (in bank) account.

Instead of the Electricity account, the business might have a Utilities account, which would include transactions for water, telephone, as well as electricity, although each utility can have a separate account.

The double entry for the above transactions:

DR:Cash in hand $500

CR: Sales $500

DR: Electricity $300

CR: Cash in bank $300

The main objective of doing double entry accounting is to ensure that all accounts balance in the end. To do this, a Trial Balance is created. The Ledgers provide a summary of all individual accounts. The Trial Balance is a summary of all the different ledgers. We will address the Ledgers in an upcoming lesson.

If the bookkeeper thinks that an error has occurred (or at the end of a month), a trail balance is usually prepared. At this stage, a worksheet is created that lists the balance of each ledger account, in their respective debit and credit column. So according to the double-entry system, each transaction's debits must equal its credits. This balancing act is a key factor in maintaining accurate financial records. It is important to note, however, that errors may still occur even if the difference of the credit and debit equals zero. For example, if a transaction has been completely omitted (error of omission), the balance will not be effected.


Samuel owns a retail fruit and vegetable store. He has given you the information as at the end of May 20x9 . He has asked you as a bookkeeper to prepare his books for the month of May.

Additional information for the month of May was as follows:

1. $2,500 paid as monthly salaries to workers

2. $500 paid as monthly telephone expenses

3. $2,000 capital injection by Samuel

4. $1,000 used to purchase 4 scales for the fruit stall (Ideally, the financing of assets should come from Capital. Cash and bank accounts are used for the day to day operations of a company.)

Transaction accounts


You are employed as a bookkeeper in Maria’s Bakery. You have the following transactions at the end of December 20x1.

1. Purchased 20 bags of flour for $2000

2. Salaries paid $500

3. Mr. Charles bought 20 cakes at $1,500

4. Capital injection of $2,500.00 by Maria

Prepare the relevant transaction accounts and trial balance as at the end of December 20x1.

Students have the option of doing the assignment on Word/Excel or on a page (you can take a photo of the assignment). If you are submitting a picture file, please ensure that the assignment is clear and not blurry.

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