The extended trial balance

An extended trial balance is a standard trial balance to which are added columns extending to the right, and in which are listed the following categories:

  1. Initial balances per general ledger. These are the account totals as of the end of the accounting period, as compiled from the general ledger. The total of all initial balance debits should equal the total of all initial balance credits.
  2. Adjusting journal entries. These are journal entries to more closely align the reported results and financial position of a business to meet the requirements of an accounting framework, such as GAAP or IFRS. This generally involves the matching of revenues to expenses under the matching principle, and so impacts reported revenue and expense levels.
  3. Income statement balances. These are the revenue, expense, gain, and loss accounts used to create the income statement.
  4. Balance sheet balances. These are the asset, liability, and equity accounts used to create the balance sheet.

In all of the above columns, debit and credit amounts are listed in separate columns. Thus, there are eight columns in total, with two columns assigned to each of the preceding categories.

A variation on the format of the extended trial balance is to begin with initial balances, add or subtract adjusting journal entries, and finish with ending balances. This approach does not separate the ending balances into income statement and balance sheet accounts, and so provides somewhat less information to the reader; this is acceptable if the reader is not attempting to create an income statement or balance sheet from the trial balance.

The extended trial balance is extremely useful for creating a visual representation of where each of the accounts in the standard trial balance goes in the financial statements, which yields revenues, expenses, and profits for the reporting period, as well as asset, liability, and equity totals as of the end of the reporting period. Any computerized accounting system automatically generates financial statements from the trial balance, so the extended trial balance is not a commonly generated report in computerized systems.

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