In this unit we are going to look at a simple way of making a preliminary check on the accuracy of the entries made in the ledger. We will do this by balancing the accounts and then drafting a trial balance. We will start, however, by demonstrating how the folio column in the ledger can be used to provide a reference system for all the double entries. Such a system helps to speed up the process pf checking that all the double entries have been completed correctly.

This timeline represents the accounting process. "Read more" to understand the main difference between Journal and Ledger before we discuss the Trial Balance.

Many businesses are involved in buying and selling. The stock accounts of these businesses are therefore going to be very busy indeed, with large numbers of transactions to be entered. To keep things simple, four additional accounts are used to record the different events that change the amount of stock. These are: purchases account, purchases returns account, sales account and sales returns account. They may be thought of as subdivisions of the stock account.

Review Exercises

Exercise 1

The information that follows refers to the business of Peter Bright on 31 January 2021: freehold property £40,000, debts due to suppliers £2,350, stock £6,800, cash £180, bank overdraft £1,000, debts due from customers £1,900, furniture and fittings £3,000, delivery vehicle £2,000, mortgage on property (10 years) £5,000, loan from ABC Finance Limited (5 years) £3,000.

Oh, Zero, Love, Nought, Nil.

The above are all ways of saying 0 in English. Watch this PowerPoint Presentation to learn much more...