5 questions foundWhat is a trial balance?
Beginner A list of all ledger account balances at a date, with debits in one column and credits in another, used to check that total debits equal total credits.Total Debits 250,000 = Total Credits 250,000Real-world example Prepared before drafting the financial statements to catch obvious errors.No. Errors of omission, commission, principle, original entry, complete reversal and compensating errors don't unbalance it.Omitting a transaction entirely still leaves Dr = CrReal-world example Auditors don't rely on a balanced TB alone; they test transactions.What is a suspense account?
Intermediate A temporary account used to make a trial balance balance while an error or unknown item is investigated, then cleared once resolved.Difference of 90 -> Dr/Cr Suspense 90 until foundReal-world example Used when the books must be finalised before an error is located.Check the addition, look for an amount equal to the difference (single omission), halve the difference (posted to wrong side), and divide by 9 (transposition of digits).Difference 540 -> 540/9 = 60 -> suspect a transposition (e.g. 65 <-> 56)Real-world example A quick divide-by-9 check often finds a swapped-digit posting fast.To check the arithmetic accuracy of the double-entry (Dr = Cr) and to provide a convenient summary from which to prepare the financial statements.TB balances -> start preparing the Income Statement & Balance SheetReal-world example Month-end close begins with extracting a trial balance.