A trial balance is a financial statement that a business prepares at the end of an accounting period, just before making adjusting entries. An unadjusted trial balance is created first and used to make adjusted entries, close the books and prepare the final versions of the financial statements. The unadjusted trial balance is created by transferring the accounts and amounts from the business’s general ledger to the worksheet. The cash account is commonly affected by several transactions.
Open the general ledger. This should be a spreadsheet or accounting software document that tracks all accounting transactions for all of the accounts a business uses. If a business uses the cash account for collecting payments, making payments and making purchases, there will be high number of debit and credit amounts involving the cash account in the general ledger.
Prepare a T-account to calculate the balance of the cash account. A T-account is a T-shaped table composed of two columns. Label the top of the T with “debit” on the far left side and “credit” on the far right side. Write “Cash” at the very top to specify that this T-account is for cash transactions only.
Start at the beginning of the period for the general ledger and review all of the business's transactions where the cash account has been used. For every debit entry of the cash account on the general ledger, record that amount in the debit column on the T-account. Do the same for every credit entry, recording these in the credit column on the T-account.
Add the debit amounts in the T-account and total them. Do the same for the credit amounts in the other column, then subtract the total credit amount from the total debit amount. This will bring you to your total cash balance, which will be a debit balance if it is a positive figure or a credit balance if it is a negative figure. Ensure that you included and recorded every single cash transaction and did the math properly to avoid any inaccuracies.
Open a new spreadsheet or trial balance document. It should be labeled with the company name and date, and be titled “Trial Balance.”
List all of the business's account names on the far left side of the spreadsheet. Look at the general ledger and list the most-liquid assets, most-liquid liabilities, equities, revenues and expenses in sequential order. Generally, the cash account is listed first because it is the most liquid asset.