Working trial balance definition

What is a Working Trial Balance?

A working trial balance is a trial balance that is in the process of being adjusted. In concept, it is an unadjusted trial balance, to which is added any adjusting entries needed to close a reporting period (such as for the monthly, quarterly, or annual financial statements). These additional entries are then entered in the general ledger, resulting in a completed trial balance. The working trial balance is useful for testing a complete set of adjusting entries to determine their impact on the financial statements, before actually making the entries in the general ledger. The steps required to use a working trial balance (assuming the existence of an accounting software package) are as follows:

  1. Print the current version of the ending trial balance, or (better yet) convert the report to an electronic spreadsheet.

  2. Enter all adjusting entries needed to close the month.

  3. Note the descriptions and calculations for each adjusting entry at the bottom of the report, so that you will understand the nature of each entry.

  4. Carry forward the adjusted account balances to the right side of the report and manually translate them into the income statement and balance sheet.

  5. Revise the adjusting entries as needed, based on the preliminary financial statement results. This is quite likely, since it may take several iterations to prepare a satisfactory set of financial statements.

  6. Create journal entries for each entry made in the working trial balance, and enter them in the general ledger, along with explanations. Be sure to have a senior accountant verify and approve each one beforehand.

  7. Print the trial balance again, and verify that all entries were made to the correct accounts and in the correct amounts.

Related AccountingTools Courses

Bookkeeping Guidebook

Closing the Books

The Year-End Close

The columns used in a working trial balance (in order from left to right) are:

  1. Account number

  2. Account name

  3. Ending debit total

  4. Ending credit total

  5. For manual entries: Blank space for debit entries

  6. For manual entries: Blank space for credit entries

  7. For financial statements: Blank space to enter income statement and balance sheet totals

The working trial balance is part of the documentation required to prepare the financial statements; it is not part of the financial statement reporting package.

It is not possible to construct a balanced working trial balance in a single entry system; the report is designed for use only with a double entry bookkeeping system.

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