Fundamentals of

SENIOR
Accountancy, Business HIGH
and Management 1 (FABM 1) SCHOOL

Self-Learning

Preparing of Trial Balance Module

13
of a Merchandising Business
666
Quarter 4
Fundamentals of Accountancy, Business and Management 1
Quarter 4 – Self-Learning Module 4: Preparing of Trial Balance of a Merchandising
Business
First Edition, 2020

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 Fundamentals of
SENIOR
Accountancy, Business HIGH
and Management 1 SCHOOL

(FABM 1)

Self-Learning

Preparing of Trial Balance

Module

13
of a Merchandising Business
12
Quarter 4
Introductory Message
For the facilitator:

Welcome to the Senior High School – Fundamentals of Accountancy,

Business, and Management 1 Quarter 4 Self Learning Module on Preparing of Trial
Balance of a Merchandising Business!

This Self-Learning Module was collaboratively designed, developed, and

reviewed by educators from the Schools Division Office of Pasig City headed by its
Officer-in-Charge Schools Division Superintendent, Ma. Evalou Concepcion A.
Agustin, in partnership with the City Government of Pasig through its mayor,
Honorable Victor Ma. Regis N. Sotto. The writers utilized the standards set by the K
to 12 Curriculum using the Most Essential Learning Competencies (MELC) in
developing this instructional resource.

This learning material hopes to engage the learners in guided and independent
learning activities at their own pace and time. Further, this also aims to help learners
acquire the needed 21st-century skills especially the 5 Cs, namely: Communication,
Collaboration, Creativity, Critical Thinking, and Character while taking into
consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the
body of the module:

Notes to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator, you are expected to orient the learners on how to use this
module. You also need to keep track of the learners' progress while allowing them to
manage their learning. Moreover, you are expected to encourage and assist the
learners as they do the tasks included in the module.
For the learner:

Welcome to Fundamentals of Accountancy, Business, and Management 1

Quarter 2 Self Learning Module on Preparing of Trial Balance of a Merchandising
Business!

This module was designed to provide you with fun and meaningful
opportunities for guided and independent learning at your own pace and time. You
will be enabled to process the contents of the learning material while being an active
learner.

This module has the following parts and corresponding icons:

Expectations - This points to the set of knowledge and skills

that you will learn after completing the module.

Pretest - This measures your prior knowledge about the lesson

at hand.

Recap - This part of the module provides a review of concepts

and skills that you already know about a previous lesson.

Lesson - This section discusses the topic in the module.

Activities - This is a set of activities that you need to perform.

Wrap-Up - This section summarizes the concepts and

application of the lesson.

Valuing - This part integrates a desirable moral value in the

lesson.

Posttest - This measures how much you have learned from the
entire module.
 EXPECTATIONS
After going through this module, you are expected to:

1. prepare a trial balance;

2. explain the purpose of trial balance; and
3. compare the trial balance of a service business and merchandising business.

PRETEST

Directions: Write true if the statement is correct and false if it is wrong.

_____1. A trial balance is a necessary checkpoint for uncovering certain types of

errors.
_____2. A trial balance is a list of accounts and their balances at a given time.
_____3. A trial balance guarantees freedom from recording errors.

For numbers 4-5

Choose the correct answer and write it in the space provided.
_____4. A trial balance:
A. is a list of accounts with their balances at a given time.
B. proves the mathematical inaccuracy of journalized transactions.
C. will not balance if an incorrect journal entry is posted twice.
D. proves that all transactions have been recorded.
_____5. The trial balance of Clooney Co. had accounts with the following normal
balances: Cash P5,000, Service Revenue P85,000, Salaries, and Wages Payable
P4,000, Salaries, and Wages Expense P40,000, Rent Expense P10,000, Clooney
Capital P42,000, Notes Payable P15,000, and Equipment P61,000. In preparing a
trial balance, the total in the debit column is:
A. P131,000
B. P216,000
C. P91,000
D. P116,000

RECAP

Directions: Write TRUE if the statement is correct, or FALSE if it is incorrect.

_____1. Posting from the purchases journal to the subsidiary ledger is generally made
weekly.
_____ 2. The accounts in the general ledger are classified into two general groups, the
statement of changes in equity accounts and income statement accounts
_____ 3. Each account has no own record in the ledger.
_____4. Debits in the journal are posted on the debit side of a ledger, and credits in
the journal as credits in the ledger.
_____ 5. The process of transferring the amounts from the journal to the appropriate
accounts in the ledger is sliding.

LESSON

A trial balance is a list of accounts and their balances at a given time.

Customarily, companies prepare a trial balance at the end of an accounting period.
The list accounts in the order in which they appear in the ledger. Debit balances
appear in the left column and credit balances in the right column. The trial balance
proves the mathematical equality of debits and credits after posting. Under the
double-entry system, this equality occurs when the sum of the debit account
balances equals the sum of the credit account balances. A trial balance may also
uncover errors in journalizing and posting. For example, a trial balance may well
have detected the error. In addition, a trial balance is useful in the preparation of
financial statements. The steps for preparing a trial balance are:

1. In their proper numerical order, make a listing of all account titles.

2. Get the account balance of each ledger account and write them under their
corresponding debit or credit column.
3. Foot or add the debit and the credit columns of the trial balance.
4. Check whether the debit totals and credit totals are equal. They must be
equal; otherwise, there is an error in your trial balance.

A trial balance is a necessary checkpoint for uncovering certain types of errors.

For example, if only the debit portion of a journal entry has been posted, the trial
balance would bring this error to light.

Limitations of a Trial Balance

A trial balance does not guarantee freedom from recording errors, however,
numerous errors may exist even though the totals of the trial balance columns agree.
For example, the trial balance may balance even when (1) a transaction is not
journalized, (2) a correct journal entry is not posted, (3) a journal entry is posted
twice, (4) incorrect accounts are used in journalizing or posting, or (5) offsetting
errors are made in recording the amount of a transaction. As long as equal debits
and credits are posted, even to the wrong account or in the wrong amount, the total
debits will equal the total credits. The trial balance does not prove that the company
has recorded all transactions or that the ledger is correct.

Locating Errors

Errors in a trial balance generally result from mathematical mistakes,

incorrect postings, or simply transcribing data incorrectly. What do you do if you are
faced with a trial balance that does not balance? First, determine the amount of the
difference between the two columns of the trial balance. After this amount is known,
the following steps are often helpful:

1. If the error is P1, P10, P100, or P1,000, re-add the trial balance columns and
recompute the account balances.
2. If the error is divisible by 2, scan the trial balance to see whether a balance
equal to half the error has been entered in the wrong column.
3. If the error is divisible by 9, retrace the account balances on the trial balance
to see whether they are incorrectly copied from the ledger. For example, if a
balance was P12 and it was listed as P21, a P9 error has been made. Reversing
the order of numbers is called a transposition error.
4. If the error is not divisible by 2 or 9, scan the ledger to see whether an account
balance in the amount of the error has been omitted from the trial balance,
and scan the journal to see whether a posting of that amount has been
omitted.

Possible Errors in the Trial Balance

1. Transposition – occurs when the order of two numbers are reversed

Example: 48 was erroneously written as 84.

234 was erroneously written as 432.

2. Transplacement or Slide – occurs when a decimal point has been moved or

misplaced

Example: 100 was erroneously written as 10

67.89 was erroneously written as 678.9

Note: In both cases, the discrepancy between the two columns of the trial
balance is divisible by 9.

Currency Signs and Underlining

Note that currency signs do not appear in journals or ledgers. Currency signs
are typically used only in the trial balance and the financial statements. Generally,
a currency sign is shown only for the first item in the column and for the total of that
column. A single line (a totaling rule) is placed under the column of figures to be
added or subtracted. Total amounts are double-underlined to indicate they are final
sums. Negative signs or parentheses do not appear in journals or ledgers.
Name of the company
Trial balance
Period covered

Asset

Liability

Equity

Figure 13.1 Sample of Trial Balance

ACTIVITIES

Activity 1
Preparing the Trial Balance
The following accounts come from the ledger of SnowGo Company Ltd. at December
31, 2017 (Japanese yen in thousands). 157 Equipment ¥88,000
311 Share Capital—Ordinary ¥20,000

332 Dividends 8,000 212 Salaries and Wages Payable2,000

201 Accounts Payable 22,000 726 Salaries and Wages Expense 42,000
200 Notes Payable 19,000 732 Utilities Expense 3,000
112 Accounts Receivable 4,000 130 Prepaid Insurance 6,000
400 Service Revenue 95,000 101 Cash 7,000

Activity 2
Prepare the trial balance
Use the data in Module #11 Activity#2 (Company DEF) to prepare the
unadjusted trial balance.
 WRAP-UP
To summarize what you have learned from the lesson, answer the following
questions:

1. discuss the steps in preparing the trial balance;

2. differentiate trial balance of service business from merchandising business;

and

3. give the importance of preparing the trial balance.

VALUING

Reflect on this!

1. What do you mean by the above quotations?

2. How will you able to apply this in our lesson and your life as a student?

POSTTEST

Directions: Identify the term that best suits each statement.

_______________1. The schedule of all balances to prove the equality of the debit and
credit.
_______________2. Occurs when order of two numbers are reversed.
For numbers 3-5
Write true if the statement is correct and false if it incorrect.
_______________3. Generally, a currency sign is shown only for the first item in the
column and for the total of that column
_______________4. The first step in locating errors is to determine the amount of the
difference between the two columns of the trial balance
_______________5. In locating errors, if the error is P1, P10, P100, or P1,000, deduct
the trial balance columns and recompute the account balances.
 KEY TO CORRECTION

5. D 5. False
4. A 5. FALSE 4. True
4. TRUE 3. True
3. FALSE
3. FALSE 2. Transposition
2. TRUE 1. Trial balance
1. TRUE 2. FALSE POSTTEST
PRETEST 1. TRUE
RECAP

References

Ballada, W. 2017. Fundamentals of Accountancy, Business, and Management 1.

VDomDane Publishers.

Banggawan, RB. Asuncion, DJ. 2017. Fundamentals of Accountancy, Business, and

Management 1. Real Excellence Publishing.

Ferrer, RC. Millan, CV. 2017. Fundamentals of Accountancy, Business, and

Management 1. Bandolin Enterprise. San Juan, DA. 2018. Fundamentals
of Accounting. Elmoer Publishing

Rabo, JS. Tugas,FC.Salendrez, HE. 2016. Fundamentals of Accountancy, Business,

and Management 1. Vibal Group Inc.

Manuel, Zenaida Vera-Cruz 18th Edition Accounting Process_Basic Concepts and

Procedures

Epstein, Lita, MBA Bookkeeping Workbook for Dummies. Wiley Publishing, Inc.

Hernane, Milagros B.,et.al 2014. Principles of Accounting. Allen Adrian Books Inc.

Valencia, Edwin G. 4th Edition. Basic Accounting (Concepts, Principles, Procedures and
Applications) Valencia Educational Supply