Ledger & Trial Balance

LOs:

1. The students understand the concept of ledger and trial balance.
2. The students can create a ledger and trial balance based on the general journal.

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untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

A ledger is a systematic record of financial transactions that are categorized and summarized from a company's financial statements, such as the balance sheet and income statement.�

Functions of a Ledger:

• Recording Transactions: Every financial transaction is recorded in the ledger, ensuring that all financial activities are documented.
• Categorizing Financial Information: Transactions are categorized into different accounts, such as assets, liabilities, equity, revenue, and expenses, to facilitate tracking and analysis.
• Double-Entry Accounting: Ledgers use a double-entry accounting system where each transaction affects at least two accounts, maintaining the accounting equation (Assets = Liabilities + Equity).
• Financial Statement Preparation: The data in the ledger is used to prepare the company’s financial statements, such as the balance sheet, income statement, and cash flow statement.
• Monitoring and Control: By maintaining an accurate ledger, businesses can monitor their financial position, control expenses, and manage resources efficiently.
• Audit Trail: Ledgers provide an audit trail for all financial transactions, which is essential for internal and external audits.
• Budgeting and Forecasting: Historical financial data from the ledger can be used to create budgets and financial forecasts.
• Regulatory Compliance: Maintaining accurate ledgers helps businesses comply with accounting standards and regulatory requirements.�

untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

Types of Ledgers:

• General Ledger: Contains all the account summaries for the company, detailing assets, liabilities, equity, revenue, and expenses.
• Subsidiary Ledgers: Break down the general ledger accounts into more detailed accounts, such as accounts receivable and accounts payable ledgers.

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untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

Venture Name

General Journal

July 2024

untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

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untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

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untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

OFFICE RENT EXPENSE

A trial balance is an internal accounting report that lists the balances of all general ledger accounts at a specific point in time. It is used to ensure that the total of all debit balances equals the total of all credit balances, thereby verifying the accuracy of the bookkeeping entries.

Function:

• Verification of Ledger Balances: The primary function of the trial balance is to verify that the ledger accounts are accurately balanced. It ensures that there is a corresponding credit entry for every debit entry recorded, maintaining the double-entry accounting principle.
• Error Detection: By checking the equality of debits and credits, the trial balance helps in identifying errors that might have occurred in the ledger entries. This includes detecting transposition errors, omission errors, and duplication errors.
• Preparation of Financial Statements:The trial balance serves as a preliminary step before the preparation of financial statements such as the income statement and balance sheet. It provides a basis for preparing these statements by summarizing all ledger accounts.
• Internal Control: It acts as a tool for internal control by allowing accountants and auditors to review and ensure that all financial transactions have been accurately recorded and classified in the ledger accounts.
• Facilitates Adjustments: The trial balance is used to identify any necessary adjusting entries that need to be made at the end of an accounting period. These adjustments may include accrued expenses, deferred revenue, depreciation, and other adjustments to align with the matching principle.
• Financial Analysis: Provides a summary of all ledger balances, which can be used for internal financial analysis and review. It helps in monitoring the company’s financial position and performance over a specific period.

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untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

Steps to Prepare a Trial Balance:

• List all Accounts: List all the accounts from the general ledger along with their balances.
• Separate Debit and Credit Balances: Separate the accounts into those with debit balances and those with credit balances.
• Total the Columns: Total the debit and credit columns separately.
• Check for Equality: Ensure that the total debits equal the total credits. If they do not, investigate and correct any discrepancies.

untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

Venture Name

Trial Balance

July 2024

untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura

untan.ac.id

Strengthening the Ecosystem of Innovation and Collaboration to Realize UNTAN as a Competitive World-Class University

Department of Management

The Faculty of Economics and Business

Universitas Tanjungpura