How to prepare a trial balance sheet

Written by kate evelyn
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How to prepare a trial balance sheet
A trial balance sheet can help you determine if your company's budget is working efficiently. (calculator image by gajatz from Fotolia.com)

One of the easiest ways to figure out if your company's budget is working efficiently is to prepare a trial balance sheet. Trial balance is a way for you to balance your income with your expenditures. Create your sheet using a notebook and pen or make it on the computer using a spreadsheet program. Some accounting programs will create a trial balance sheet for you.

Skill level:
Easy

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Things you need

  • Financial software
  • Pencil
  • Paper
  • Calculator

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Instructions

  1. 1

    Determine your company's debits. Debits are assets or expenses, including cash on hand, inventory and depreciation of property, such as vehicles and buildings. These items will go on the left-hand side of your trial balance.

  2. 2

    Find the numbers for your credits, including liabilities, revenue and equity. Liabilities are different from expenses because this is money owed that you haven't yet paid out.

  3. 3

    Create your trial balance sheet by sorting your items into categories. For example, payroll costs and insurance expenses can go under the heading of "operational expenses." Avoid making more than five or six categories or it will get confusing.

  4. 4

    List the category names on the far left side of the sheet, putting the names of the items inside the categories in subsequent rows, running down the page. Put the category titles in bold or all caps.

  5. 5

    Add the numeric debit amounts to the second column, putting them directly next to their headings. Then shift one column to the right and insert the credit amounts in the same fashion. Make sure to put negative numbers in parenthesis.

  6. 6

    Add the respective columns together (or subtract) at the bottom of the sheet. This should give you one total for debits and another for credits. See that the numbers match. If they don't, check your arithmetic and try again, or consult your general ledger to see if there are any mistakes.

Tips and warnings

  • To figure out depreciation, divide the value of the property by the number of years it will last, and then divide it again by 12 to get the monthly total.
  • Create your sheet at the beginning of the new month.
  • You don't have to create your balance sheet for the entire month at once. You can make one on a weekly basis or at any point in time.

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