Accounting Cycle Step 4: Trial Balance

Fundamentals of Accounting Posting to Reporting
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Transcript

Okay, so we keep doing that process, we can do that process probably every day of executing business events, turning them into journal entries, posting them to general ledger, you could do it less frequently, you could do it weekly, you could do it monthly, you could do it annually, you could do it. Once in your life, you won't know much about your financial position if you only have once in your life. But if if you do it kind of think of it as a daily process. That's something that just is an ongoing repetitive task, then, but you probably won't analyze your financial statements or your financial position on a daily basis. You'll do that process more frequently to keep up with the workload. And then less frequently, you'll probably go analyze the financial position that you're in.

That process then means taking the general ledger and the first step in in creating financial reports is creating the trial balance the trial balance Balance is a very simple process of saying do the debits equal the credits, do the pluses equal the minuses, that process was developed over a long time to help keep track of humans doing addition, and make sure that they done addition correctly. It's really nothing more than a simple check of, of taking the balances and dividing them up as to whether the pluses or minuses balance, whether they're assets or liabilities and seeing that they check. But you have to make that list of what are the balances as of a point in time in order to make the financial statements. That process is something we still do today. We say, Okay, I want to now produce financial statements. So I'm going to take the balances as of this point in time and create my reports.

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