Trial Balance and Adjustments

Nnenna Nick-Obiegbu Written by Nnenna Nick-Obiegbu · 2 min read >

I am happy to say that I am making great progress with Financial Accounting, I am not sure of the reason.

Nevertheless, I am grateful to the factors that contributed to my finally understanding this course.

Now, what are Accounting Adjustments?

This is a business transaction that has not yet been recorded in the accounting records of the company as of a certain date.

We make accounting adjustments by amending entries if such transactions have not yet been recorded as of the end of an accounting period or if the entry is described inaccurately.

These changes are intended to conform to the company’s reported financial results. The accrual basis is primarily employed for applying the adjustments.

When should you adjust your accounting records?

Adjusting entries are normally done after your accountant or bookkeeper has prepared and evaluated the trial balance.

What is the Trial Balance?

A trial balance is a report that shows the balances in all of a company’s general ledger accounts at a specific moment. All significant accounting items, including as assets, liabilities, equity, revenues, expenses, Income, and losses are tied to the accounts shown on a trial balance. It is mostly used to determine the balance of debits and credit entries from the transactions listed in the general ledger at a specific moment.

When preparing the Ledger or trial balance here is a short acronym I use to remember how to post my records, it is called DEAL & CLIP

D- Debit all…

E- Expenses



C-Credit all..

L- Liabilities


P- Provisions

The Trial Balance report cannot identify some of errors, including:

Omission error: The transaction was not input into the database.

Original entry error: In the double-entry transaction, the sums on both sides are incorrect.

• Error of reversal: When the exact amounts for a double-entry transaction are entered, but the account that should be debited is credited instead of the other way around.

Principle error- the right side and amount was correct, but in the wrong book of account.

Okay so back to adjustments;

Your bookkeeper may occasionally be able to submit recurring transactions, and these entries will be automatically posted each month just before the end of the period.

In other cases, you may need to compute the adjustments for each period, and your accountant will then provide you with adjusting entries to make following the conclusion of the accounting period. In either case, be sure you comprehend the entry’s goal.

Even if you have adjusting entries, your bookkeeping procedures might not necessarily be in error. If you suspect a problem, talk to your accountant. They will be able to inform you if your bookkeeping procedures need to be altered in order to minimize the need for correcting entries.

Adjustments examples:

  • adjusting the balance of a reserve account,
  • Recognizing earnings for which bills have not yet been sent.
  • putting off the acknowledgment of income that has already been billed but is still pending.
  • Recognizing costs for supplier bills that haven’t arrived yet.
  • Delaying the recognition of costs that the company has been charged but for which it has not yet used an asset.
  • identifying prepaid costs as costs.

That is all I learned, there are some examples with workings I would have loved to show you but again, this is not a textbook. Till we meet again.

#MBA21 #LearningTogether #LagosBusinessSchool


Utannah Dania in General
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