Balance Sheet

Also called a statement of financial position, a balance sheet is a financial "snapshot" of your business at a given date in time. It lists your assets, your liabilities, and the difference between the two, which is your owner's equity, or net worth. The accounting equation (assets = liabilities + owner's equity) is the basis for the balance sheet.

The balance sheet is prepared after all adjusting entries are made in the general journal, all journal entries have been posted to the general ledger, the general ledger accounts have been footed to arrive at the period end totals, and an adjusted trial balance is prepared from the general ledger amounts.

Financial statements normally do not show cents. All amounts should be rounded to the nearest dollar.


You are getting ready to close the books for the year ended December 31, 2002. You post totals from the journals to the general ledger, and foot the general ledger accounts. Then you prepare the following preliminary trial balance, using the balances from your general ledger accounts.

Beta Service Company
Preliminary Trial Balance
December 31, 2002


Debit Credit
Cash in bank 3,423
Accounts receivable 11,400
Equipment 42,900
Accumulated depr. equip.
Buildings 119,000
Accumulated depr. build.
Land 80,000
Accounts payable
Payroll taxes payable
Mortgage payable
Drawing account 24,000
Advertising 18,900
Depreciation 16,760
Insurance 4,500
Interest expense 12,421
Payroll taxes 16,233
Property taxes 4,989
Repairs and maintenance 23,430
Utilities 3,856
Wages 198,515

580,327 580,327

Business Tools

A trial balance spreadsheet can be found in the Business Tools area. It is an Excel 4.0 spreadsheet template, so you can use the template as a starting point for your own trial balance.

What if your trial balance does not balance? In other words, what if total debits don't equal total credits? This shouldn't surprise or discourage you. In fact, it might be more surprising if it does balance. Accounting errors happen. Even experienced bookkeepers normally have to find trial balance errors.