Working trial balance definition
/What is a Working Trial Balance?
A working trial balance is a trial balance that is in the process of being adjusted. In concept, it is an unadjusted trial balance , to which is added any adjusting entries needed to close a reporting period (such as for the monthly, quarterly, or annual financial statements ). These additional entries are then entered in the general ledger , resulting in a completed trial balance. The working trial balance is useful for testing a complete set of adjusting entries to determine their impact on the financial statements, before actually making the entries in the general ledger. The steps required to use a working trial balance (assuming the existence of an accounting software package) are:
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Print the current version of the ending trial balance, or (better yet) convert the report to an electronic spreadsheet.
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Enter all adjusting entries needed to close the month.
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Note the descriptions and calculations for each adjusting entry at the bottom of the report.
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Carry forward the adjusted account balances to the right side of the report and manually translate them into the income statement and balance sheet .
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Revise the adjusting entries as needed, based on the preliminary financial statement results.
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Create journal entries for each entry made in the working trial balance, and enter them in the general ledger, along with explanations.
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Print the trial balance again, and verify that all entries were made to the correct accounts and in the correct amounts.
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The columns used in a working trial balance (in order from left to right) are:
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Account number
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Account name
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Ending debit total
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Ending credit total
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For manual entries: Blank space for debit entries
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For manual entries: Blank space for credit entries
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For financial statements: Blank space to enter income statement and balance sheet totals
The working trial balance is part of the documentation required to prepare the financial statements; it is not part of the financial statement reporting package.
It is not possible to construct a balanced working trial balance in a single entry system ; the report is designed for use only with a double entry bookkeeping system .
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