Accounting Templates: Trial Balance, Entries & Financials

Posted on Feb 6, 2026 in Financial and Accounting Management

Adjusted Trial Balance Format

Debit Column:

  • Cash
  • Accounts Receivable
  • Interest Receivable
  • Notes Receivable (short-term)
  • Supplies
  • Prepaid Insurance
  • Prepaid Rent
  • Merchandise Inventory
  • Debt Investments (short-term)
  • Land
  • Buildings
  • Equipment
  • Vehicles
  • Patents
  • Copyrights
  • Trademarks
  • Goodwill
  • Dividends
  • Cost of Goods Sold
  • Wages Expense
  • Salaries Expense
  • Depreciation Expense — Buildings
  • Depreciation Expense — Equipment
  • Insurance Expense
  • Utilities Expense
  • Interest Expense
  • Supplies Expense
  • Rent Expense
  • Advertising Expense
  • Delivery Expense
  • Office Supplies Expense
  • Income Tax Expense

Credit Column:

  • Accumulated Depreciation — Buildings
  • Accumulated Depreciation — Equipment
  • Accounts Payable
  • Wages Payable
  • Interest Payable
  • Dividend Payable
  • Unearned Revenue
  • Notes Payable (short-term)
  • Notes Payable (long-term)
  • Bonds Payable
  • Mortgage Payable
  • Common Stock
  • Preferred Stock
  • Paid-In Capital in Excess of Par
  • Treasury Stock (debit-balance contra-equity)
  • Retained Earnings
  • Sales Revenue
  • Services Revenue
  • Interest Revenue

Debits equal credits.

Adjusting Entries

  • Depreciation: Dr Depreciation Expense | Cr Accumulated Depreciation
  • Prepaid Insurance Used: Dr Insurance Expense | Cr Prepaid Insurance
  • Prepaid Rent Used: Dr Rent Expense | Cr Prepaid Rent
  • Supplies Used: Dr Supplies Expense | Cr Supplies
  • Unearned Revenue Earned: Dr Unearned Revenue | Cr Services Revenue
  • Accrued Wages: Dr Wages Expense | Cr Wages Payable
  • Accrued Interest Expense: Dr Interest Expense | Cr Interest Payable
  • Accrued Interest Revenue: Dr Interest Receivable | Cr Interest Revenue
  • Accrued Services Revenue: Dr Accounts Receivable | Cr Services Revenue

Closing Entries

  1. Step 1 — Close Revenues: Dr All Revenue Accounts | Cr Income Summary
  2. Step 2 — Close Expenses: Dr Income Summary | Cr All Expense Accounts
  3. Step 3 — Close Income Summary (Net Income): Dr Income Summary | Cr Retained Earnings
  4. Step 3 — Close Income Summary (Net Loss): Dr Retained Earnings | Cr Income Summary
  5. Step 4 — Close Dividends: Dr Retained Earnings | Cr Dividends

Key Definitions

  • Current Asset (CA): Converts to cash within 1 year or the operating cycle.
  • Operating Cycle: Time from purchase of inventory to sale and cash collection.
  • Long-Term Investment (LTI): Held more than 1 year.
  • Property, Plant, and Equipment (PPE): Tangible long-term assets used in operations.
  • Intangible Assets (IA): No physical substance; e.g., patents, copyrights, trademarks, goodwill.
  • Current Liability (CL): Payable within 1 year or the operating cycle.
  • Long-Term Liability (LTL): Payable after 1 year.
  • Revenue Recognition: Recognize revenue when the performance obligation is satisfied.
  • Expense Recognition (Matching): Expenses are recognized when they help produce revenues.
  • Prepaid Expenses: Assets paid in advance that expire through use or time.
  • Unearned Revenue: Liability until the service is performed.
  • Accrued Revenues: Earned but not yet received or recorded.
  • Accrued Expenses: Incurred but not yet paid or recorded.
  • Depreciation: Allocate asset cost over its useful life; allocation, not valuation.
  • Straight-Line Depreciation: (Cost − Salvage Value) ÷ Useful Life.
  • Book Value: Asset cost minus accumulated depreciation.
  • Contra Account: Has the opposite normal balance and is subtracted from the related account.
  • Accumulated Depreciation: Contra-asset with a credit balance.
  • Treasury Stock: Reacquired stock; contra-equity with a debit balance.
  • Par Value: Assigned value per share.
  • Paid-In Capital: Cash and assets received for stock.
  • Retained Earnings: Cumulative net income not distributed as dividends.
  • Dividends: Distribution to stockholders declared by the board of directors.
  • Dividends in Arrears: Unpaid cumulative preferred dividends disclosed in the notes.
  • Preferred Stock: Priority on dividends and liquidation; may lack voting rights.
  • Cumulative Dividend: Current and prior unpaid dividends that must be paid before common dividends.

Multiple-Step Income Statement

Sales Revenue: minus Sales Discounts, minus Sales Returns and Allowances = Net Sales; minus Cost of Goods Sold = Gross Profit; minus Operating Expenses (Selling and Administrative) = Income from Operations; plus Other Revenues and Gains, minus Other Expenses and Losses = Income Before Income Taxes; minus Income Tax Expense = Net Income.

Statement of Retained Earnings

Beginning Balance + Net Income (or − Net Loss) − Dividends = Ending Balance.

Balance Sheet: Assets

Current Assets: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Merchandise Inventory.

Long-Term Investments: Investments in stock, bonds, real estate.

Property, Plant, and Equipment: Land; Buildings minus Accumulated Depreciation; Equipment minus Accumulated Depreciation.

Intangible Assets: Patents, Copyrights, Trademarks, Goodwill.

Total Assets

Balance Sheet: Liabilities and Equity

Current Liabilities: Accounts Payable, Wages Payable, Interest Payable, Dividend Payable, Unearned Revenue, Notes Payable (short-term).

Long-Term Liabilities: Notes Payable (long-term), Bonds Payable, Mortgage Payable.

Stockholders’ Equity: Common Stock, Paid-In Capital in Excess of Par, Retained Earnings minus Treasury Stock.

Total Liabilities and Equity

Merchandising Entries

  • Purchase Inventory: Dr Merchandise Inventory | Cr Cash or Accounts Payable.
  • Freight — FOB Shipping Point (Buyer): Dr Merchandise Inventory | Cr Cash.
  • Freight — FOB Destination (Seller): Dr Delivery Expense | Cr Cash.
  • Purchase Discount: Dr Accounts Payable | Cr Merchandise Inventory | Cr Cash.
  • Sale on Credit: Dr Accounts Receivable | Cr Sales.
  • Sale Cost: Dr Cost of Goods Sold | Cr Merchandise Inventory.
  • Sales Return: Dr Sales Returns and Allowances | Cr Accounts Receivable.
  • Sales Return Cost: Dr Merchandise Inventory | Cr Cost of Goods Sold.
  • Payment with Discount: Dr Cash | Dr Sales Discounts | Cr Accounts Receivable.

Corporation Entries

  • Issue Stock at Par: Dr Cash | Cr Common Stock.
  • Issue Stock Above Par: Dr Cash | Cr Common Stock | Cr Paid-In Capital in Excess of Par.
  • Declare Dividend: Dr Retained Earnings | Cr Dividend Payable.
  • Pay Dividend: Dr Dividend Payable | Cr Cash.
  • Purchase Treasury Stock: Dr Treasury Stock | Cr Cash.

Ratios

  • Profit Margin: Net Income ÷ Net Sales.
  • Current Ratio: Current Assets ÷ Current Liabilities.
  • Acid-Test Ratio: (Cash + Investments + Receivables) ÷ Current Liabilities.
  • Gross Profit Rate: Gross Profit ÷ Net Sales.
  • EPS: (Net Income − Preferred Dividends) ÷ Weighted Average Shares.
  • Price-Earnings Ratio: Market Price ÷ EPS.
  • Dividend Yield: Annual Dividends per Share ÷ Market Price.

Freight Terms

  • FOB Shipping Point: Buyer owns goods in transit; buyer pays freight; record freight as Inventory.
  • FOB Destination: Seller owns goods in transit; seller pays freight; record freight as Delivery Expense.

Credit Terms

  • 2/10, n/30: 2% discount if paid within 10 days; net due in 30 days.
  • n/10: Net due in 10 days; no discount.

Contra Accounts

  • Sales Discounts: Contra-revenue with a debit balance.
  • Sales Returns and Allowances: Contra-revenue with a debit balance.
  • Accumulated Depreciation: Contra-asset with a credit balance.
  • Treasury Stock: Contra-equity with a debit balance.