Trial balance: where drawings, returns and an overdraft go
Some balances sit on a side their name does not suggest. Put drawings, returns, an overdraft and VAT in the right column and make the trial balance agree.
Task 1Ask what the account is2 questions
Every balance goes in the column of its own side: a debit balance in the debit column, a credit balance in the credit column.
Most are easy. Assets and expenses are debit balances. Liabilities, capital and income are credit balances. A few need a second look, because each one takes something away from another account.
- Drawings
- money the owner takes out. It lowers capital, so it is a debit balance
- Sales returns
- goods customers sent back. It lowers income, so it is a debit balance
- Purchases returns
- goods sent back to suppliers. It lowers an expense, so it is a credit balance
Task 2Bank and VAT can be on either side2 questions
You pick the right answer.
Task 3Making it agree3 questions
You work out a figure and find the mistake in a table.