Business Studies - Junior Secondary 3 - Forms of trial balance

TERM: 2^ND TERM

WEEK SIX

Class: Junior Secondary School 3

Age: 14 years

Duration: 40 minutes of 5 periods each

Date:

Subject: BUSINESS STUDIES

Topic: FORMS OF TRIAL BALANCE

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

I.)   Meaning of forms of trial balance                      

II.)  Identify the forms of trial balance - Trading profit and loss accounts

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

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

INSTRUCTIONAL PROCEDURES

PERIOD 1-2

NOTE

FORMS OF TRIAL BALANCE

Forms of trial balance refer to different layouts or structures in which the trial balance can be presented. These forms can vary based on the needs of the organization or the preferences of the accountant preparing the financial statements. The purpose of these forms is to organize and summarize the balances of all ledger accounts for the preparation of financial statements.

Forms of Trial Balance

1. Horizontal Trial Balance: In this form, the trial balance is presented with two columns: one for debit balances and one for credit balances. Accounts with debit balances are listed on the left side, while accounts with credit balances are listed on the right side.
2. Vertical Trial Balance: This form lists all the ledger accounts in a single column, with debit balances shown as positive numbers and credit balances shown as negative numbers. The totals of the debit and credit columns are then calculated separately to ensure they are equal, verifying the accuracy of the ledger balances.
3. Account Form Trial Balance: In this form, each ledger account is listed separately, with debit balances shown on the left side and credit balances on the right side. This detailed form allows for a quick review of individual account balances and their classification as assets, liabilities, equity, income, or expenses.

Trading, Profit and Loss Accounts (Income Statement)

The Trading, Profit and Loss Accounts, also known as the Income Statement, is not a form of trial balance but rather a separate financial statement that summarizes the revenues, expenses, and resulting net income or loss for a specific period. It provides valuable information about the profitability of a business over a defined period of time.

Components of trading, profit and loss account

Major components of the Trading, Profit and Loss Accounts (Income Statement) include:

I.) Revenue: Represents the income generated from the primary operations of the business, such as sales revenue or service fees.

II.) Expenses: Represent the costs incurred in generating revenue, such as salaries, rent, utilities, and depreciation.

III.) Gross Profit: Calculated by subtracting the cost of goods sold (for trading businesses) or direct expenses from revenue. It indicates the profitability from core business operations.

IV.) Operating Profit: Calculated by subtracting operating expenses (administrative and selling expenses) from gross profit. It reflects the profitability from operating activities.

V.) Net Profit (or Net Loss): The final amount after subtracting all expenses (including taxes and other non-operating expenses) from revenues. A positive net profit indicates profitability, while a negative net profit indicates a loss.

EVALUATION: 1.  What is the meaning of forms of trial balance    

2.   Identify the 2 forms of trial balance
3. Describe briefly trading profit and loss accounts
4. Mention 4 components of trading profit and loss account

CLASSWORK: As in evaluation

CONCLUSION: The teacher commends the students positively