hi i know this may sound stupid but i just need to clarify some things with general ledger and the trial balance.
For example, i am given the post trial balance for ABC Ltd. These accounts which include cash, accounts receivable, accum dep... etc.., do i need to add on to these figures for the following month balance?
Eg. post trial cash account 1000 in september...... my general ledger says 6000 for october.. so does that mean 1000 + 6000? I'm sorry if i don't make sense, but i need some help! thanks
No problem, I'm here to help! Let's break it down.
The trial balance is a list of all the accounts and their respective balances at a specific point in time, typically at the end of an accounting period like a month or a year. It includes both the debit and credit balances.
When you receive a post trial balance for ABC Ltd, it means that it's the balances of all the accounts for a particular month (in your example, September). The accounts mentioned, such as cash, accounts receivable, and accumulated depreciation, represent the balances in those accounts at the end of September.
Now, let's talk about the general ledger. The general ledger is a collection of all the accounts in a company's accounting system. It records all the transactions and movements that occur in each account. In your case, it shows the changes in the cash account for October, with a balance of 6000.
To clarify, you don't need to add the figures from the post trial balance and the general ledger together. The post trial balance provides the ending balances for the accounts for a specific month, while the general ledger shows the changes that occurred during the subsequent month.
To find the new balance for the cash account in October, you would start with the balance from the post trial balance for September (1000) and then add any changes that occurred in October as recorded in the general ledger.
For example, if the general ledger shows that in October, there were additional cash receipts totaling 5000, the new balance for the cash account in October would be calculated as follows:
Starting balance from September post trial balance: 1000
Additions or receipts in October from the general ledger: 5000
New balance for October: 1000 + 5000 = 6000
I hope this clears up your confusion! Let me know if there's anything else I can help with.