How to Figure Out Total Revenue on a Trial Balance

A trial balance is one of the intermediate steps in an accounting cycle. The first few steps in the cycle involve analyzing transactions, recording them in a journal and posting the journal entries to the company's general ledger. The next steps are to prepare the unadjusted and adjusted trial balances, which are tabular lists of all the account balances. Adjusting entries record account for deferred and accrued expenses and revenues. The purpose of a trial balance is to check the math and facilitate the preparation of financial statements. Credit accounts, such as revenue, are in the right-hand column titled "Credit Balance" in the trial balance.

Copy the revenue balances from the general ledger to the unadjusted trial balance. Your revenue accounts may include merchandise sales, professional service fees, consulting fees and investment income.

Verify that the journal and ledger entries for the revenue accounts during the accounting period are complete and correct. This includes checking the math and ensuring that you have recorded the transactions in the proper accounts, thus reducing the possibility of errors in the trial balance and in the financial statements.

Prepare the adjusting entries for work completed but for which you have not received payment. For example, if you have provided consulting services to a client but have not transmitted an invoice, prepare an adjusting entry to record the earned revenue by debiting accounts receivable and crediting consulting revenue. Transfer these amounts to the adjusted trial balance.

Add up all the revenue accounts from the adjusted trial balance to calculate the total revenue.

Tips

  • The journal is a chronological record of transactions and the ledger is a collection of the company's accounts.

    Debits increase asset and expense accounts, and decrease revenue, liability and shareholders' equity accounts. Credits decrease asset and expense accounts, and increase revenue, liability and shareholders' equity accounts.

    Sole proprietorships and other small businesses may use cash-basis accounting, in which you record only cash transactions. Adjusting entries for noncash transactions, such as incurred expenses, are not required.

    The closing process after the trial balance closes all income statement revenue and expense accounts to a temporary income summary account, which you then close to retained earnings. The revenue and expense balances are zero at the beginning of each accounting period.

    You cannot eliminate all errors with a trial balance. For example, if you have forgotten to record a transaction, recorded a transaction in the wrong account or used debits instead of credits, you may not find the error with a trial balance.

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About the Author

Based in Ottawa, Canada, Chirantan Basu has been writing since 1995. His work has appeared in various publications and he has performed financial editing at a Wall Street firm. Basu holds a Bachelor of Engineering from Memorial University of Newfoundland, a Master of Business Administration from the University of Ottawa and holds the Canadian Investment Manager designation from the Canadian Securities Institute.