Accounting Tutorial

2. Preparing Trial Balance

First of all to explain a trial balance we explain the different terms such as Normal Balance.

Normal Balance are related to Asset, Liability, Capital, Income and Expense Accounts.


Normal Balances

 Account Type  Normal Balance
 Assets  Debit (DR)
 Liability  Credit (CR)
 Capital  Credit (CR)
 Income  Credit (CR)
 Expense  Debit (DR)

Setting up Trial Balance

In a Trial Balance DRs = CRs.
List your accounts in the Order above.

Sample

 Account  DR  CR
 Cash  50.00  
 Bank  1500.00  
 Office Equipment  2500.00  
 Inventory  200.00  
 Accounts Receivable  200.00  
 Accounts Payable    300.00
 VISA Payable    0.00
 Taxes Payable    100.00
 Owner Equity    4050.00
 Owner Withdrawal    0.00
 Retained Earnings    0.00
 Sales    0.00
 Cost of Goods Sold  0.00  
 Rent Expense  0.00  
 Phone Expense  0.00  
 Shipping Expense  0.00  
 Totals DR/CR  4450.00  4450.00