Accounting · Lesson Plan
Trial Balance and Financial Statements
The last steps of the accounting cycle turn recorded transactions into reports anyone can read. This lesson teaches how to prepare a trial balance — a two-column list of all debit and credit balances that should be equal — and then use it to build the income statement and balance sheet that communicate a company’s financial position. Students prepare a trial balance and draft the two statements.
For Teachers
Lesson at a glance
- Topic
- Accounting
- Grade Level
- Grades 11–12 / College
- Resource Type
- Lesson + Worksheet
- Estimated Time
- 45–60 minutes
- Format
- Lesson + worked example
- Materials
- Printable lesson, worksheet, pencils
What Students Learn
Learning objectives
- Define a trial balance and its two-column format
- Prepare a trial balance from account balances
- Explain why debits must equal credits
- Build an income statement from the trial balance
- Build a balance sheet from the trial balance
Materials
What you’ll need
- Printed lesson and worksheet (one per student)
- Calculator
- Pencils
Key Terms
Vocabulary
- Trial balance
- A list totaling all debit and credit balances for a period.
- Debit
- An entry on the left side of an account.
- Credit
- An entry on the right side of an account.
- Income statement
- A report of revenues and expenses over a period.
- Balance sheet
- A snapshot of assets, liabilities, and equity at a point in time.
- Financial position
- The overall financial condition of a business.
For Teachers
Lesson plan
Estimated time: one 45–60 minute class period.
Lesson sequence
- The trial balance (15 min). The two-column list and why debits must equal credits.
- Income statement (12 min). Build revenues minus expenses from the balances.
- Balance sheet (12 min). Assets, liabilities, and equity at period-end.
- Worksheet (11 min). Students prepare a trial balance and draft the two statements.
Assessment
Assess the worksheet for a balanced trial balance and correctly structured statements.
Discussion
Discussion questions
- What is a trial balance, and what does it show?
- Why must total debits equal total credits?
- What goes on the income statement?
- What goes on the balance sheet?
- How do these statements communicate financial position?
Printable Lesson & Worksheet
Trial Balance and Financial Statements — Lesson & Worksheet
A printable accounting lesson and worksheet on preparing a trial balance and building the income statement and balance sheet from it.
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