 Hello. In this presentation, we will be discussing a trial balance. Objectives. At the end of this, we will be able to define a trial balance, list components of a trial balance, and explain how a trial balance is used. When considering the trial balance, we first want to think about where the trial balance falls within the construction of the financial statements. In other words, what processes go before the trial balance, what goes after the trial balance, where does the trial balance fit into our process? Remember the ending goal, the ending process of the accounting being to compile the data in such a way to create the financial statements, those financial statements being the end product. Typically, if we're thinking about a linear process, then we're thinking about all the transactions that would happen during the month, those being recorded in terms of journal entries in the general journal. So we would be recording a bunch of journal entries, one looking like this. This is recording draws and checking account for a shareholder who are a drawing from a sole proprietor being pulled out of the company. Then we would post all of those to the general ledger. So posting the general journal entries from the journal entries from the general journal to the general ledger, the general ledger being a list of all the accounts. So we're going to have a list of all accounts in order by assets, liabilities, equity, income, and then expense accounts. And we're showing all the activity for whatever period that we are now covering. Typically, we're looking at a month by month period or possibly a year's period, whichever the case may be, we're going to see all this activity when considering the general ledger, this particular account being a debit to drawings. Here's the debit to drawings and a credit to cash. Here is the credit to cash. That shows all the activity. Now the problems that we will be working and also when you're thinking about a computer system, note that this tends to happen more all at the same time, meaning if we're working this by hand with paper and pencil, we would record all the journal entries and then record the posting of all those journal entries to the general ledger and then take those general ledger balances to create the trial balance. That's a useful way to think about it when considering how the process works. In reality, in a computer system and as much as possible in any system that we can put together, we would like to do more of this at the same time, meaning I would like to construct the journal entry and then post it and then record the posting or the trial balance as we go rather than waiting till the end. In practice, that's how we will look at it, but it's useful to think of this process as a linear process as we're just going to do all the one, all of the journal entries and then all of the GL and then all of the trial balance when considering where the trial balance falls. Once we have these balances then, we're going to take these ending balances here, these ending balances in all these accounts, the ending balance for cash, $6,160 for accounts receivable, $800 for the supplies, we got $325, we skip over here to accounts payable, we have a credit balance represented here by the brackets, credits beating the debits of $1,890, notes payable, credit balance of $8,000. We're just going to take those ending balances then to create the trial balance. The trial balance then is something that can really be a lot easier for us to look at and get a quick glance at just those ending balances, eliminating all the detail. For example, in the cash account, we will see on the trial balance $6,160, eliminating all of this detail within the trial balance and thereby being able to work with something that's a bit more manageable and can tell us some different types of data. So when we look at the trial balance then, it could be formatted in a couple different forms, but we're typically always going to have the accounts listed in the same order as we find them on the general ledger. That's going to be the assets in green in this case on top, then the liabilities, then the equity, then the revenue, then the expenses. Remember if you remember that if you are talking about a sole proprietor, your equity will be capital and the drawings will typically be in the equity type area as well. If you're talking about a corporation, you're going to have common stock and you're going to have retained earnings. So you'll note here that up here in cash, we've got that $6,160. Again, we eliminated the detail here. Now the reason we're going to do that, of course, is that now we can manipulate this data and do more things with it. At the end of the day, we're going to use this trial balance in order to construct the financial statements, the end product. But the trial balance also helps us to kind of see what is going on as we go, meaning we can easily add up these assets and