JSS3: BUSINESS STUDIES - 2ND TERM
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Setting Simple Business Goals | Week 13 Topics|1 Quiz
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Simple Single Business Plan | Week 22 Topics|1 Quiz
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Consumer Protection Agencies | Week 38 Topics|1 Quiz
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Consumer Protection Agencies
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Need for Consumer Protection
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Consumer Protection Council (CPC)
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Nigeria Communications Commission (NCC)
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Standard Organisation of Nigeria (SON)
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Nigerian Electricity Regulatory Commission (NERC)
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National Agency for Food and Drug Administration and Control (NAFDAC)
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Roles and Responsibilities of Consumer Protection Agencies
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Consumer Protection Agencies
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How to make Complaints | Week 43 Topics|1 Quiz
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Reasons and Procedures for Banning and Restricting Chemicals Not Suitable for Use | Week 54 Topics|1 Quiz
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How to Seek Redress | Week 65 Topics|1 Quiz
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Personal Finance | Week 77 Topics|1 Quiz
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Trial Balance | Week 83 Topics|1 Quiz
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Trading, Profit and Loss | Week 93 Topics|1 Quiz
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Balance Sheet | Week 101 Topic|1 Quiz
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Business Letters | Week 112 Topics|1 Quiz
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Simple Tabulation - Table Creation | Week 124 Topics|1 Quiz
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Manuscript Abbreviations and Erasing Technique | Week 133 Topics|1 Quiz
Trial Balance
Topic Content:
- Definition of Trial Balance
- Uses of Trial Balance
- Balances that Form Trial Balance
- Debits and Credits
- Causes of Unbalanced Trial Balances
- How to Find the Error
- Errors that do not affect Trial Balance Agreement
What is a Trial Balance?
A trial balance is a statement showing a list of balances, in a double-entry extracted from the ledgers, to test the arithmetical accuracy of the accounts.
A trial balance is a list of ledger balances. It is a summary of all the debit and credit balances in the ledger including the cash book and petty cash book.
Uses of Trial Balance:
Below are some uses of Trial Balance;
1. To check the accuracy of entries made in the ledger.
2. To give first-hand information to the bookkeeper about errors in recording transactions/committed to posting into the ledger.
3. It shows ledger items at a glance.
4. Items in the trial balance are used for the preparation of final accounts e.g. profit and loss accounts, balance sheet, and cash flow statement.
Balances that Form Trial Balance:
Debits and Credits:
The trial balance has two sides, the debit side and the credit side.
The debit side includes accounts such as asset accounts and expense accounts. Credits are accounts such as income, equity, and liabilities.
Causes of Unbalanced Trial Balances:
A trial balance might fail to balance for a variety of reasons. For example, if you mixed up or transposed numbers while posting from the general journal to the general ledger, or from the ledger to the trial balance sheet, this could cause the trial balance to not equal out.
When students transpose numbers, they write down all of the correct numbers, but they don’t put the numbers into the right sequence (place-value order) For example 13 and 31.
How to Find the Error:
If the amount is substantial, start with the larger transactions made during the month and make sure no numbers were transposed and that the transactions were applied to the proper ledger account.
Errors that do not affect the Trial Balance Agreement:
1. Errors of Omission: This error occurs when an item is completely omitted from the debit or credit sides of the account.
2. Error of Commission: This error occurs when a transaction is entered into the wrong person’s account. e.g. entered into Bada account instead of Dada account.
3. Error of Principle: This error occurs when transactions are entered into the wrong class of account. e.g. entered into Motor Van account instead of Motor expenses account.
4. Error of Original Entry: This error occurs when a wrong amount is entered on the debit and credit sides of the account e.g. Sales of N95 to Ayo account entered in the account as N59.
5. Compensation Error: This error occurs when the same amount is posted to the two sides of the ledger account. This error cancels each other out.
6. Error of Complete Reversal of Entry: This occurs when the double entry for a transaction is reversed. The account to be debited has been credited and vice-versa.
These errors will be discussed in your bookkeeping and accounting class for senior school.