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Q. What is trial balance?
The firm credits two Accounts Payable and accounts Cash in this one entry. But the dollar totals of the debits and credits are equal. Cyclically accountants use a trial balance to test the equality of their debits and credits. A trial balance is a record of the ledger accounts and their debit or credit balances to determine that debits equal credits in the recording process. The accounts show in this order 1) assets 2) liabilities 3) stockholders' equity 4) dividends 5) revenues and 6) expenses. Within the assets group the most liquid (closest to becoming cash) asset appears first and the least liquid appears last. Inside the liabilities those liabilities with the shortest maturities appear first. Revise Exhibit 13 the trial balance for Micro Train Company. Note the catalogue of the account numbers and account titles on the left the column for debit balances the column for credit balances and the equality of the two totals.
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