🌌 Episode 1: Squishy's Accounting Galaxy
Squishy 🍓
Falak 💗
A cute accounting adventure where Squishy takes Falak through the mysterious world of ledger accounts, debit balances, credit balances and the ultimate Trial Balance!
"Don't worry Falak... I've brought chocolates AND accounting magic." 🍫✨
Let's turn the entire topic into something your brain can actually remember!
An initial trial balance is a list of all the accounts in the ledger together with their debit or credit balances. We call it "initial" because this is the first trial balance prepared before any corrections and before the later process of preparing the extended trial balance. Its main job is to bring all the ledger balances together in one place and check whether the total debit balances are equal to the total credit balances.
It provides the balances needed as a starting point for preparing the statement of comprehensive income and statement of financial position.
It shows current balances of assets, liabilities, capital, income and expenses, giving management useful accounting information.
If total debits and credits do not agree, it indicates that certain types of double-entry errors may have occurred.
Squishy says: "This is where we need our accounting brain!"
Assets
Drawings
Expenses
Purchases
Sales Returns
Liabilities
Capital
Income
Sales
Purchases Returns
Discount Received
STEP 1: Balance off all the accounts in the nominal/general ledger.
STEP 2: List all the accounts together with their debit or credit balances and calculate the total of both columns.
A trial balance can identify certain errors, particularly errors that make the debit and credit totals unequal. However, some errors do not affect the equality of the two totals. For example, if an expense is accidentally recorded as the wrong type of expense, both the debit and credit sides may still be correct. Likewise, if an entire transaction is completely omitted, neither side is recorded, so the trial balance can still balance.
In a manual accounting system, people enter the double-entry transactions themselves, so there is a greater opportunity for human error. In a computerised system, many double-entry records are created automatically by accounting software. This reduces the risk of certain manual entry mistakes, although computerised systems can still contain errors if incorrect information is entered or the system is set up incorrectly.
Squishy has given Falak some ledger accounts. Let's balance them!
Debit total = $945
Credit total = $2,000
What is the Bank balance?
Squishy throws six accounting cards onto the table. Drag? Nope! Just click the correct column for each one. 💗
Avylon's trial balance has the following totals:
What can Squishy conclude?
Falak survived Squishy's Trial Balance Galaxy! 🌌💗