noob with question on trial balances
hi team - quick question i would appreciate some guidance on. can you confirm my understanding of the below?
monthly trial balances for income statement: the value at the end of each month is cumulative. for example, january is 200,000, february is 400,000. That would imply that by the end of Feb, company had genered 400K in revs, but february revenue was 200k (not 400k). Is that right?
monthly trial balances for balance sheet: value at the end of each month is obviously not cumulative. for example, january can be 200,000, but february can be 100,000 because it is just showing the value at a point on time. is that right?
thanks in advance all. much appreciated.
Short answer is yes. For the IS, increases/decreases to accounts will be reflected as credits/debits and the trial balance at month end will reflect cumulative YTD change (assuming these are TBs ripped right from the system). Same goes for BS (which is technically cumulative when you think about starting with x balance, applying y credit/debit, and ending up with z balance).
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