Chapter 6 & 14: The Extended Trial Balance

Question 1

What is the purpose of an extended trial balance?

Answer 1

The extended trial balance allows the initial trial balance to be adjusted to provide figures for the final accounts.

Question 2

What are the five steps to prepare an extended trial balance?

Answer 2

Step 1 - enter trial balance
Step 2 - include any adjustments
E.g. accruals, prepayments, closing inventory, debts, depreciation, suspense
Step 3 - total the adjustment columns
Step 4 - enter the figures from the trial balance including any adjustments into the SPL or SFP columns
Step 5 - balance the SPL columns, the balancing figure is the profit or loss. Enter the opposite entry in the SFP

Question 3

What do the SPL credits and debits indicate in the extended trial balance?

Answer 3

If the credits exceed the debits, a profit has been made.

If the debits exceed the credits, a loss has been made.