TOTAL CHILD SCHOOL, PORT HARCOURTWEEK: 5
TOPIC: TRIAL BALANCE
CLASS: JSS3
GENDER: MIXED
AVERAGE AGE: 12 YEARS
DURATION: 2 PERIODS (40min. for each period)
REFERENCE: WABP junior secondary business studies book 3 and
Classic business studies book 3
BEHAVIOURAL OBJECTIVES: By the end of the lesson, students should be able to:
PREVIOUS KNOWLEDGE: the students knows about balance.
Here is one Biblical set on Trial Balance:
Biblical Objective:
To encourage accuracy, accountability, and honesty in recording and balancing financial records.
Biblical Truth:
God values order, truth, and integrity in all records and responsibilities entrusted to us.
Bible Verse:
“Be sure you know the condition of your flocks, give careful attention to your herds.”
— Proverbs 27:23 (NIV)
LESSON CONTENT
STEP 1: TRIAL BALANCE
Atrial balance is the proof of the equality of debits and credits in the ledger.
USES OF TRIAL BALANCE
1. The trial balance is used to test the arithmetical accuracy of ledger entries.
2. The trial balance is used to prepare final account
3. It provides a space for missing figure.
STEP 2: RULES OF TRIAL BALANCE
1. All assets must be debited
2. All liabilities must be credited
3. All income or gain must be credited
4. All expenses must be debited
5. Sales are credited
6. Purchases are debited
7. Discount allowed is debited
8. Discount received is credited
9. Capital is credited
10. Loan is credited
11. Overdraft is credited
12. Drawings are debited
ILLUSTRATION
Use the following information to prepare the account of Bola and Sons, extract a trial balance.
N
March 2 Started business with cash 20,000
March 3 Bought goods by cash 12,000
March 4 Cash sales 5,000
March 5 Cash purchases 2,000
March 6 Bought stationery by cash 200
March 7 Sold goods for cash 1,500
March 8 Paid rent by cash 800
March 10 Paid salaries by cash 1000
STEP 3: ERRORS THAT DO NOT AFFECT THE AGREEMENT OF THE TRIAL BALANCE
Since the trial balance is a test of arithmetical accuracy of the ledger, then as a matter of fact, the debit side must be equal to credit side. In some situations, the trial balance may be balanced but there are some errors which may not be disclosed.
These errors are:
1. Errors of commission
2. Compensating errors
3. Errors of original entry
4. Errors of omission
5. Errors of principle
6. Complete reversal of entry
When the trial balance totals disagree and the errors are not discovered before the final accounts, it will be necessary to open a suspense account.
STEP 4: SUSPENSE ACCOUNT
Suspense account can be defined as the account used to record the difference on a trial balance temporarily until the errors are detected and corrected.
SOME TRADING, PROFIT AND LOSS ACCOUNT ITEMS FOUND IN A TRIAL BALANCE
1. Opening stock 2. Wages and salaries
3. Rent 4. Electricity
5. Sales 6. Discount received
7. Discount allowed 8. Purchases
Some Balance Sheet items which can be extracted from a trial balance include:
1. capital 2. Debtor 3. Creditors
4. land and building 5. Overdraft 6. loan
7. cash in hand 8. Cash at bank 9. drawings
10. machinery 11. Furniture & fittings
12. closing stock 13. Motor van
EVALUATION:
1. What is a trial balance?
2. Mention properties of a trial balance
3. Mention balance sheet items that can be extracted from a trial balance.
ASSIGNMENT
From the following transactions carried out in March, prepare a cash book and open up appropriate ledgers for the business of N Dangogo. Extract trial balance.
N
March 1 Started business with cash 1000
March 2 Cash received from G Makeri 600
March 3 Paid rent 60
March 4 Cash sales 600
March 5 Bought stationery 10
March 8 Paid salaries 300
March 10 Loaned F. Jakande 700
March 18 C. Akanu Paid 200
March 24 Cash purchases 540
March 25 Cash sales 800
March 26 Bought furniture& fittings 480
March 28 Paid rent 50
March 29 F. Jakande repaid loan 500
March 30 Cash sales 150
March 31 Transport 30