Auriel's Trial Balance and End-of-Year Adjustments: An Analysis

Part B
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Contents
A. Assess the source and structure of Auriel’s trial balance (3.1)......................................................3
B. Evaluate the effect of the following end of year adjustments and notes on the business’s income
statement and balance sheet (3.2)........................................................................................................5
References.............................................................................................................................................6
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A. Assess the source and structure of Auriel’s trial balance (3.1).
After preparing all the ledgers from journal entries the balances of ledgers end up in the trial
balance. Trial balance includes both debit and credit balances. It has two sides one debit and
the other for credit. It always has a date for which it has been prepared. For Auriel it has
been prepared at 31st March 2017. According to the general practice trial balance is prepared
at the end of the accounting year but if required it can be prepared at any time and in
accordance with the double entry accounting system (Ijiri, 2014). Trial balance is necessary
to prepare as it makes sure all the debits and credits are balanced. The debit and credit sides
always balance in the trial balance and if they do not, the only reason is there is an error in
the accounting records (Maynard, 2017).
Though trial balance cannot serve as a system to detect errors if two entries of incorrect
amounts are entered even then the trial balance will balance. The other could be due to
compensating errors that are errors which compensate each other. All the debit balances are
listed in the left column and all the credits in the right column. Assets and expenses have
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