Business Studies - Junior Secondary 3 - Trial balance

TERM: 2^ND TERM

WEEK FIVE

Class: Junior Secondary School 3

Age: 14 years

Duration: 40 minutes of 5 periods each

Date:

Subject: BUSINESS STUDIES

Topic: TRIAL BALANCE

SPECIFIC OBJECTIVES: At the end of the lesson, pupils should be able to

I.) Explain the meaning of a trial balance

II.) Identify the uses of trial balance

III.) Balance that form trial balance

IV.) Form a trial balance from ledger

V.) Identify a balance sheet item from the trial balance

INSTRUCTIONAL TECHNIQUES: Identification, explanation, questions and answers, demonstration, videos from source

INSTRUCTIONAL MATERIALS: Videos, loud speaker, textbook, pictures,

INSTRUCTIONAL PROCEDURES

PERIOD 1-2

NOTE

TRIAL BALANCE

A trial balance is a statement prepared by a company or organization that lists all the ledger accounts with their respective debit or credit balances. It ensures the total debits equal the total credits, providing a preliminary check on the accuracy of the accounting records.

Uses of a Trial Balance

1. It helps in detecting errors such as mathematical mistakes, posting errors, or omission of entries in the accounting records.
2. The balances from the trial balance are used to prepare financial statements like the income statement and balance sheet.
3. It serves as an internal control mechanism to ensure that the books of accounts are in balance and transactions are accurately recorded.
4. Provides auditors with a starting point to verify the accuracy of the financial statements during audits.

Balance that Form Trial Balance

A trial balance consists of:

I.) Assets: Accounts representing resources owned by the entity (e.g., cash, accounts receivable, inventory). 

II.) Liabilities: Accounts representing obligations owed by the entity (e.g., accounts payable, loans payable).

III.) Equity: Accounts representing the owner's or shareholders' interest in the company (e.g., capital, retained earnings).

IV.) Income: Accounts representing revenues earned by the company (e.g., sales, service income).

V.) Expenses: Accounts representing costs incurred to generate revenue (e.g., salaries, rent).

Formation of Trial Balance from Ledger

1. Prepare Ledger Accounts: Maintain separate ledger accounts for each type of transaction (e.g., cash, sales, purchases) throughout the accounting period.
2. Calculate Balances: Determine the balance of each ledger account by totaling the debits and credits posted to that account during the period.
3. List Balances: List each ledger account and its balance on a trial balance worksheet, placing debit balances on the left and credit balances on the right.
4. Total and Verify: Total the debit and credit columns separately and ensure they are equal. If they are not equal, investigate and correct any errors before proceeding.

Identification of Balance Sheet Items from the Trial Balance

From the trial balance, the following items can be identified for inclusion in the balance sheet:

I.) Assets: Accounts with debit balances represent assets such as cash, accounts receivable, inventory, equipment, and investments.

II.) Liabilities: Accounts with credit balances represent liabilities such as accounts payable, loans payable, accrued expenses, and deferred revenue.

III.) Equity: The difference between total assets and total liabilities (Assets - Liabilities) represents equity, including owner's equity, retained earnings, and any other equity accounts.

EVALUATION: 1. What is the meaning of a trial balance?

2. Mention 4 uses of trial balance
3. Identify 5 balance that form trial balance
4. Discuss briefly the formation of a trial balance from ledger

CLASSWORK: As in evaluation

CONCLUSION: The teacher commends the students positively