Accounting for your small business involves matching debits to credits. You need to create a trail balance sheet followed by an adjusted trial balance sheet that shows these debits and credits. If you follow set procedures each month, you will have accurate adjusted trial balance sheets that you can use to monitor the progress of your business.

Trial Balance

You must create a trial balance for the month. Do this by creating two columns. The column on the left should contain all of your debits for the month. The column on the right should contain all of your credits for the month. The two columns should have totals that match. The reason theymatch is that even if your income exceeds your expenses, you should show a debit that puts the excess income into an account.

Adjusting Entries

At the end of the month, or sometimes during the following month, you may find debits and credits you did not record on your trial balance. Add the missing entries and balance the sheet so that debits match credits. This adjusted trial balance sheet is your opportunity to correct not only missing information that was left out of the trial balance, but also a chance to actually balance debits and credits. Your trial balance sheet may have been out of balance, and your adjusted balance sheet can create balanced columns because of the new information contained in the adjusting entries.


You may have errors, even if your debit and credit columns have matching totals. For example, you may have placed an asset in the wrong category, or you may have used the wrong account to record an expense. You should also check to see that no transactions were entered twice. Examine your trial balance sheet for these errors and make necessary corrections.

Typical Adjustments

You will find that your adjusting entries come from some predictable areas. For example, payroll taxes usually have to be entered late in the month or during the following month because final figures for these taxes are not available until the month’s total wages have been figured. Your interest-payable figure may not be available until after your trial balance sheet is prepared. You can prepare your adjusted trial balance sheet after the lender notifies you of the interest you owed for the month. Insurance deductible may also affect your adjusted trial balance sheet. If you have made any insurance claims during the month, the insurance company may not notify you of the deductible you must pay until the following month.