How To Make Trial Balance In Excel
How To Make Trial Balance In Excel – Trial balance variance reports are considered an audit report and are often used by accountants to ensure their ledger balances. One of the key features of this type of report is that it not only shows the current monthly account balance, but also provides a comparison to last year. This additional data, along with the percent (%) standard deviation and checksum columns, make this report more useful than typical monthly trial balance reports. Below is an example of this type of report.
Companies and organizations use trial balance discrepancy reports to increase their ability to detect problems with their balance sheets compared to monthly trial balance reports. When implemented as part of good business practice in the Financial Accounting Department, a company can improve its financial accuracy and control and reduce the chance of financial statements being incorrect due to problems with general ledger entries.
How To Make Trial Balance In Excel
Progressive’s finance and accounting departments sometimes use several different trial balance variance reports, as well as financial statements and other management and control tools.
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Actual (historical transaction) data typically comes from enterprise resource planning (ERP) systems such as: Microsoft Dynamics 365 (D365) Finance, Microsoft Dynamics 365 Business Central (D365 BC), Microsoft Dynamics AX, Microsoft Dynamics NAV, Microsoft Dynamics GP , Microsoft Dynamics SL, Sage Intacct, Sage 100, Sage 300, Sage 500, Sage X3, SAP Business One, SAP ByDesign, Acumatica, Netsuite and more.
For analyzes that use budgeting or forecasting, planning data most often comes from internal Excel spreadsheet models or professional enterprise performance management (CPM/EPM) solutions. Most ERP and accounting software can produce suitable standard reports. However, we often need more than that.
One way to create more specific reports is to do it in Excel. We can export the data from our systems and create an Excel extract template where we summarize this data.
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This is a common approach among many accountants. But this is a time-consuming and error-prone exercise. Once we manually prepare our reports, it is difficult to make corrections and almost impossible to reuse the work for the next periodic report.
The good news is that with a few Excel tricks, we can automate much of the process. And the truth is, it’s relatively easy once you get past setting up the initial structure.
All structured output data can be used to create a lookup table for each report. We can follow this general guideline for allocating our trial balance to the financial statements.
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When we map reports, we usually have more than one level of mapping. For example, we might have one card for our trial balance for the financial statements (income statement, balance sheet) and then another for our accompanying detailed notes where we present the data in more detail.
By following this approach when building our reports, we can eliminate some of the problems associated with manual report summarization.
Reports typically display multiple aggregated data, and we may have multiple rows of data corresponding to a single row of statements, requiring complex and hard-to-read SUM functions.
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Let’s say our cash bank account is on line 44 on the trial balance this period, but on line 47 the next period, due to the addition of new accounts. If we follow the traditional approach of aggregating sums by addition, our formula will point to the wrong cell address in the next period.
Account names in the trial balance may differ from those in our statements, making manual reconciliation difficult when preparing individual periodic statements. This can lead to inconsistencies between claims.
When developing our mapping model in Excel, we can use the built-in data validation feature. With this, we can ensure correct mapping and avoid input errors.
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One option for validating data in Excel is to match the contents of a cell to a list of items. This is useful when we create specific reports that our ERP or accounting software cannot automate on its own.
We can convert our mapping range to a table and give it a name. This makes adding new elements to our declarations more robust. Using the Excel Spreadsheet feature will help you:
First, we start by creating the statement structure. We prepare a statement of income and expenses and a balance sheet based on the current balance sheet of the company.
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The next step is to get the source data. In this case, this will be our accumulated trial balance for the reporting period. Here is our trial balance for 2020:
Also create another sheet that will contain our mapping table and some report settings such as the reports date.
We will have two options to check the mapping. An account in our trial balance can belong to the income statement or the balance sheet. That’s why we’ve created a table that lists these options.
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As discussed above, we can convert it to an Excel spreadsheet so that it expands automatically as new items are added. In this example, however, we use a slightly more elegant approach that allows us to validate conditional data. But about that a little later.
Note that if we rely on the Table function, it’s a good idea to give our table a more meaningful name. While you have a table cell, go to the Table tab and enter your ID in the Table Name field.
Below that, let’s take all of our lines and identify them as part of the income statement or balance sheet. You can select cells containing rows from report sheets and place them in the Options tab.
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We’ll use the data inspection function (Data tab) and start with cell D8 (the first row below the expression header). Use the Enable > List option.
Click OK and there you have it – a drop-down menu that allows you to select a statement for each trial balance account. Pass the data validation by copying the formatting to all rows.
We want the available options for each account class to be displayed based on the extraction option selected. Let’s add an unselected option to our Settings tab that we can use.
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We then follow the same approach as for validating the declaration data, but for the first row of the Department column.
We use two nested IF statements. The first one checks if the selected statement corresponds to the first option in our Settings – Income Statement section. If so, we return all possible account class mappings that match that Statement option. If the IF statement is FALSE, we check the second statement option. And if that returns FALSE again, we specify the No Selection option.
If we try the dropdown for the Class column when we have no operator, we only see the Select Statement.
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However, if we select the Scorecard option, the Class dropdown menu will show all rows in that section of our Settings tab.
Data validation ensures that we avoid spelling mistakes or using a line that is not in the structure of our report. If you try to enter something that is not on the list, the check will show an error.
The next step is to go ahead and use what we know about the contents of each account to match it to our statements. This requires a deep understanding of business processes and how accounting data reflects them.
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We can then link the income statement and balance sheet directly to that date using the identifier.
All that remains is to use Excel’s SUMIF formula to aggregate the source data based on the mapping. Let’s start with the income statement.
The first parameter of the formula is the range in which we meet our criteria. This will be the “Class” column.
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The third parameter is the sum range. In the case of revenue and income, we usually choose the invoice credit flow.
The formula essentially aggregates the output data based on the row in the same row of our report.
For Expenses we need to go to Deposit Transactions. Debits appear as positive values in the trial balance, but expenses appear as negative values in the statements. So we put a minus sign in front of the SUMIF formula.
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However, if we look closely at our trial balance, we notice that account 704 PPE Sales Revenue has both a debit and a credit turnover. This is because we use the same account to record the revenue and the cost of the asset sold.
To account for such cases, we can add a net traffic column and use it in our SUMIF functions. We can take the net value because the sale of personal protective equipment is not material and is not part of normal operations. We can usually present them in net form in our financial statements.
We can then set up all our SUMIF formulas to use the Net T/O column. We initially add a negative sign, as in TB, debits (expenses) are positive and credits (income) are negative.
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