Purpose of a Trial Balance: 1.Trial Balance acts as the first step in the preparation of financial statements. 2.Trial balance ensures that for every debit entry recorded, a corresponding credit entry has been recorded in the books in accordance with the double entry concept of accounting. 3.Trial balance ensures that the account balances are accurately extracted from accounting ledgers. 4.Trail balance assists in the identification and rectification of errors.

What is SEC? The United States Securities and Exchange Commission (the SEC), one of the most prominent federal regulatory agencies, states that its mission "is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation." SEC Mission: *.Insider trading *.Accounting fraud *.False or misleading investment information SEC Reach: *.Securities exchanges *.Securities brokers and dealers *.Investment advisors *.Mutual funds.

Is trial balance an account? Trial Balance is a list of closing balances of ledger accounts on a certain date and is the first step towards the preparation of financial statements. It is usually prepared at the end of an accounting period to assist in the drafting of financial statements.

Double Entry Accounting Double Entry Accounting Overview Double entry accountingis a record keeping system under which every transactionis recorded in at least two accounts; there is no limit on the number of accounts used in a transaction, but the minimum is two accounts.There are two columns in each account, with debitentries on the left and creditentries on the right. In double entry accounting, the total of all debit entries must match the totalof all credit entries. When this happens, the transaction is said it be "in balance." If the totals do not agree, the transaction is said to be "out of balance," and you will not be able to use the resulting information to create financial statements. Double Entry Accounting Definitions The definitions of a debit and credit are: *.Adebitis an accounting entry that either increases an assetor expenseaccount, or decreases a liabilityor equityaccount. It is positioned to the left in an accounting entry. *.Acreditis an accounting entry that either increases a liabilityor equityaccount, or decreases an assetor expenseaccount. It is positioned to the right in an accounting entry. Anaccountis a separate, detailed record associated with a specific asset, liability, equity, revenue, expense, gain, or loss. Examples of accounts are: *. Cash(asset account: normally a debit balance) *. Accounts receivable(asset account: normally a debit balance) *. Inventory(asset account: normally a debit balance) *. Fixed assets(asset account: normally a debit balance) *. Accounts payable(liability account: normally a credit balance) *.Accrued liabilities (liability account: normally a credit balance) *.Notes payable (liability account: normally a credit balance) *. Common stock(equity account: normally a credit balance) *. Retained earnings(equity account: normally a credit balance) *. Revenue- products (revenue account: normally a credit balance) *.Revenue - services (revenue account: normally a credit balance) *. Cost of goods sold(expense account: normally a debit balance) *. Wageexpense (expense account: normally a debit balance) *.Utilities (expense account: normally a debit balance) *.Travel and entertainment (expense account: normally a debit balance) *. Gainon sale of asset (gain account: normally a credit balance) *. Losson sale of asset (loss account: normally a debit balance)

Double Entry System The field of accounting—both theolder manual systems and today'sbasic accounting software—is based on the 500-year-old accounting procedure known asdouble entry. Double entry is a simple yet powerful concept: eachand every one of a company's transactions will result in an amount recorded intoat leasttwoof the accounts in the accounting system. The Chart of Accounts To begin the process of setting up Joe's accounting system, he will need to make a detailed listing of all the names of the accounts that Direct Delivery, Inc. might find useful for reporting transactions. This detailed listing is referred to as a chart of accounts. (Accounting software often provides sample charts of accounts for various types of businesses.) As he enters his transactions, Joe will find that the chart of accountswill help him select the two (or more) accounts that are involved. Once Joe's business begins, he may find that he needs to add more account names to the chart of accounts, or delete account names that are never used. Joe can tailor his chart of accounts so that it best sorts and reports the transactions of his business. Because of the double entry system all of Direct Delivery's transactions will involve a combination of two or more accounts from the balance sheet and/or the income statement. Marilyn lists out some sample accounts that Joe will probably need to include on his chart of accounts: Balance Sheet accounts: *.Asset accounts (Examples: Cash, Accounts Receivable, Supplies, Equipment) *.Liability accounts (Examples: Notes Payable, Accounts Payable, Wages Payable) *.Stockholders' Equity accounts (Examples: Common Stock, Retained Earnings) Income Statement accounts: *.Revenue accounts (Examples: Service Revenues, Investment Revenues) *.Expense accounts (Examples: Wages Expense, Rent Expense, Depreciation Expense)

Examples of Double Entry 1. Purchase of machine by cash DebitMachine (Increase in Asset) CreditCash (Decrease in Asset) 2. Payment of utility bills DebitUtility Expense (Increase in Expense) CreditCash (Decrease in Asset) 3. Interest received on bank deposit account DebitCash (Increase in Asset) CreditFinance Income (Increase in Income) 4. Receipt of bank loan principal DebitCash (Increase in Asset) CreditBank Loan (Increase in Liability) 5. Issue of ordinary shares for cash DebitCash (Increase in Asset) CreditShare Capital (Increase in Equity)

#What is SEC? The United States Securities and Exchange Commission (the SEC), one of the most prominent federal regulatory agencies, states that its mission"is to protect investors, maintain fair, orderly, and efficient markets,and facilitate capital formation." SEC Mission:The principal way that the SEC fulfills its mission is bycreating and enforcing regulations that set the standardsfor the public disclosure of financial information by public companies. Its main areas of enforcement activity are: *.Insider trading *.Accounting fraud *.False or misleading investment information SEC Reach:The oversight exercised by the SEC extends to allcategories of participants in the securities markets, primarily: *.Securities exchanges *.Securities brokers and dealers *.Investment advisors *.Mutual funds SEC Locations:The SEC employs approximately 3,500 staff in Washington, DC and in 11 regional offices: *.New York *.Boston *.Philadelphia *.Miami *.Atlanta *.Chicago *.Denver *.Fort Worth *.Salt Lake City *.Los Angeles *.San Francisco