Insights Accounting
Trial Balance Format, and What It Actually Proves
The trial balance format used by UAE businesses, a worked AED example, the errors it cannot detect, and how it converts into IFRS financial statements.
Key takeaways
- A trial balance proves arithmetic, not accuracy — four common error types survive it intact
- It is a worksheet, not one of the five statements listed in IAS 1 paragraph 10
- The extended trial balance adds adjustment and final columns, and is where year-end work happens
- Every IFRS line item traces back to a mapping from the trial balance, and that mapping should be written down
- The VAT control account on the trial balance should reconcile to the last return filed with the FTA
- A trial balance run before reconciliations is a draft, however neatly it foots
A trial balance lists every account in the general ledger with its closing balance in a debit or credit column, and proves that the two columns are equal. It is the worksheet a UAE business builds its financial statements from, and the first document an auditor asks for.
It is also the most over-trusted report in accounting. A trial balance that balances proves the double entry is arithmetically complete. It does not prove the numbers are right, and there are four ordinary error types it will carry through without a murmur. This page sets out the format, a worked AED example, what the report can and cannot tell you, and how it converts into IFRS statements.
Once the trial balance agrees, the UAE financial statement template takes those balances into a formatted balance sheet, profit and loss and cash flow.
The trial balance format
Four columns are the minimum. A fifth, for classification, is what makes the report useful, because it is the classification that drives the mapping into the financial statements.
| Column | What goes in it | Why it earns its place |
|---|---|---|
| Account code | The numeric or alphanumeric code | Sorting, and stable reference when an account is renamed |
| Account name | The description | What a human reads |
| Classification | Asset, liability, equity, income or expense | Drives the split between balance sheet and profit and loss |
| Debit | Balance where debits exceed credits | Half the arithmetic proof |
| Credit | Balance where credits exceed debits | The other half |
Some UAE businesses add an opening balance column and a movement column, which turns the report into a period comparison. That is a preference rather than a standard, and it is genuinely useful when a monthly close is being reviewed.
A worked trial balance for a Dubai trading LLC
The figures below are illustrative and describe no client. They correspond to the balance sheet and profit and loss statement used in our companion guides, so you can follow the same numbers through all three.
| Code | Account | Class | Debit (AED) | Credit (AED) |
|---|---|---|---|---|
| 1010 | Property, plant and equipment, cost | Asset | 1,485,000 | |
| 1015 | Accumulated depreciation | Asset | 865,000 | |
| 1020 | Right-of-use asset, net | Asset | 480,000 | |
| 1040 | Rent and utility deposits | Asset | 95,000 | |
| 1110 | Inventories | Asset | 1,850,000 | |
| 1210 | Trade receivables | Asset | 3,085,000 | |
| 1215 | Allowance for expected credit losses | Asset | 145,000 | |
| 1230 | Amounts due from related parties | Asset | 410,000 | |
| 1250 | Prepayments and other receivables | Asset | 175,000 | |
| 1310 | Bank current accounts | Asset | 612,000 | |
| 1320 | Petty cash | Asset | 28,000 | |
| 2110 | Trade payables | Liability | 2,310,000 | |
| 2130 | Amounts due to related parties | Liability | 120,000 | |
| 2150 | Accruals and other payables | Liability | 265,000 | |
| 2210 | VAT control account | Liability | 140,000 | |
| 2220 | Corporate tax payable | Liability | 90,000 | |
| 2310 | Bank term loan | Liability | 1,050,000 | |
| 2320 | Lease liability | Liability | 505,000 | |
| 2410 | Provision for end-of-service benefits | Liability | 285,000 | |
| 3010 | Share capital | Equity | 300,000 | |
| 3020 | Retained earnings brought forward | Equity | 1,527,700 | |
| 4010 | Revenue, standard rated | Income | 13,940,000 | |
| 4020 | Revenue, zero rated | Income | 660,000 | |
| 4900 | Other income | Income | 65,000 | |
| 5010 | Cost of sales | Expense | 10,220,000 | |
| 6010 | Salaries and wages | Expense | 1,845,000 | |
| 6020 | End-of-service benefits charge | Expense | 78,000 | |
| 6110 | Rent and utilities | Expense | 96,000 | |
| 6210 | Distribution and selling costs | Expense | 1,190,000 | |
| 6310 | Depreciation and amortisation | Expense | 395,000 | |
| 6410 | Impairment loss on trade receivables | Expense | 95,000 | |
| 6500 | Other administrative expenses | Expense | 221,000 | |
| 7010 | Finance costs | Expense | 118,000 | |
| 8010 | Corporate tax expense | Expense | 42,700 | |
| Totals | 22,520,700 | 22,520,700 |
Two features of that listing are worth pointing out because they are design choices rather than accidents.
Revenue is split between standard rated and zero rated at account level. That single decision is what lets the VAT return be produced from the ledger rather than from a spreadsheet, and it is the difference between a five-minute return and a two-day one.
The allowance for expected credit losses sits as a separate credit balance under the receivables account rather than being netted into it. Netting it away means nobody can see whether it was ever reviewed.
Zero
Financial statements that IAS 1 requires a trial balance to be presented as — it is a worksheet, not a statement
Source: IAS 1 Presentation of Financial Statements, paragraph 10
What a trial balance cannot detect
This is the section most templates leave out, and it is the reason a balanced report should never end an investigation.
| Error type | What happened | Why the columns still agree |
|---|---|---|
| Omission | A supplier invoice was never entered | Both sides are short by the same amount |
| Commission | A payment was posted to the wrong customer | Right account type, wrong account |
| Principle | A fit-out cost was posted to repairs | Debit and credit are equal, classification is wrong |
| Original entry | An invoice for AED 41,500 was entered as AED 14,500 | The wrong figure was entered on both sides |
| Reversal | Debit and credit were transposed between two accounts | Totals unchanged |
| Compensating | Two unrelated errors happen to offset | The net effect on the columns is nil |
Errors of principle are the expensive ones in a UAE context. A capital purchase expensed to repairs reduces profit, so it reduces the corporate tax charge, and it also removes an asset from the balance sheet a bank was relying on. Nothing in the trial balance flags it. Only somebody reading the repairs account line by line will find it.
A trial balance answers one question — is the double entry complete. Businesses treat it as though it answered a second one, and that is where the trouble starts.
The extended trial balance, where the year end actually happens
The extended version adds adjustment columns and then a final split between the two statements. It is the working paper an auditor most wants to see, because every year-end judgement is visible on one page with a reason beside it.
| Stage | Columns | Typical UAE entries at this stage |
|---|---|---|
| Initial | Debit, credit | The raw ledger position |
| Adjustments | Debit, credit | Accruals, prepayments, depreciation, expected credit losses, end-of-service provision, stock adjustment, corporate tax charge |
| Adjusted | Debit, credit | The position the statements will be built from |
| Profit and loss | Debit, credit | Income and expense accounts only |
| Balance sheet | Debit, credit | Asset, liability and equity accounts only |
Two things are worth insisting on. Every adjustment needs a one-line reason recorded next to it, because an unexplained journal at year end is the single most common audit query in UAE files. And the adjustments should be posted into the accounting system rather than living only in a spreadsheet, or next year’s opening balances will not match this year’s signed accounts.
Mapping the trial balance to IFRS statements
This is the step that turns a worksheet into a financial statement, and it should be written down once and reused every year.
| Trial balance accounts | Maps to | Statement |
|---|---|---|
| 1010 cost, 1015 accumulated depreciation | Property, plant and equipment | Balance sheet, non-current assets |
| 1210 trade receivables, 1215 allowance | Trade receivables, net | Balance sheet, current assets |
| 1230 amounts due from related parties | Amounts due from related parties | Balance sheet, current assets, presented separately |
| 1310 bank, 1320 petty cash | Cash and cash equivalents | Balance sheet, current assets |
| 2210 VAT control | VAT payable | Balance sheet, current liabilities |
| 2310 term loan | Split between current and non-current portions | Balance sheet, both sections |
| 4010 and 4020 revenue accounts | Revenue | Profit and loss, top line |
| 5010 cost of sales | Cost of sales | Profit and loss, by-function format |
| 6010, 6020, 6110, 6500 | Administrative expenses | Profit and loss, by-function format |
| 6310 depreciation, 6010 salaries | Disclosed by nature in the notes | Notes, per IAS 1 paragraph 104 |
Notice the term loan row. One ledger account produces two financial statement lines, because IAS 1 paragraph 69 splits liabilities by whether settlement can be deferred for twelve months. The split is a judgement made at the mapping stage, from the loan schedule, and it is one of the handful of places where a trial balance cannot mechanically become a balance sheet. The full line-item structure it feeds is set out in our guide to balance sheet format, and the income side in profit and loss statement format.
Designing a UAE chart of accounts backwards
The number of accounts you need is determined by the reports you are obliged to produce. Work backwards from three lists rather than copying a template.
| Obligation | What it forces into the chart of accounts |
|---|---|
| IAS 1 minimum line items | Separate accounts for inventories, trade receivables, provisions, current tax, deferred tax |
| VAT return boxes | Revenue split by treatment: standard rated, zero rated, exempt, out of scope, reverse charge |
| Corporate tax adjustments | Entertainment, related-party charges, interest, fines and penalties, each in its own account |
| End-of-service obligations | A provision account and a charge account, separate from salaries |
| Related-party disclosure | Separate receivable and payable accounts per counterparty group |
| Bank credit review | Trade receivables kept clean of shareholder and staff balances |
A UAE trading SME built this way usually lands between sixty and a hundred and twenty accounts. Below that range, the VAT return has to be assembled by hand. Above it, usually because customers have been given ledger accounts of their own, the trial balance becomes too long to read and people stop reading it. Our guide to accounting terms explained for UAE business owners covers the vocabulary if any of the categories above are unfamiliar.
Mapping the trial balance to the UAE VAT return
The financial statements are one output of the trial balance. The VAT return is another, and it is the one that runs four times a year rather than once.
| Ledger account | Feeds | Frequency |
|---|---|---|
| Revenue, standard rated | Output tax on standard-rated supplies | Each tax period |
| Revenue, zero rated | Zero-rated supplies, no output tax | Each tax period |
| Revenue, exempt | Exempt supplies, and the input tax apportionment that follows | Each tax period |
| Reverse charge purchases | Both an output and a recoverable input entry | Each tax period |
| Input VAT on purchases | Recoverable input tax | Each tax period |
| Input VAT, blocked | Entertainment and certain motor vehicles, not recoverable | Each tax period |
| VAT control account | The net position paid to or recovered from the FTA | Each tax period |
Article 62(1) of the VAT Executive Regulation sets the standard tax period at three calendar months, and Article 64(1) requires the return to reach the Federal Tax Authority no later than the twenty-eighth day after the period ends. A chart of accounts that cannot produce those figures directly turns a routine UAE filing into a quarterly reconstruction exercise.
The control account is the discipline. After each return is filed, the VAT control account on the trial balance should equal the liability on that return plus whatever has been posted since. When it does not, the difference is almost always output tax charged on invoices that never made it into a return — a live exposure rather than a presentation issue, and one worth finding before a tax audit does.
What the FTA can actually ask to see
Article 2(1) of Cabinet Decision No. 74 of 2023 names the records a business must keep, and the list is more specific than most owners expect. It covers records and books in which payments and receipts, purchases and sales, revenues and expenditures are recorded, and it then names four items expressly: balance sheet and profit and loss accounts, records of wages and salaries, records of fixed assets, and inventory records and statements including quantities and values at the end of any relevant tax period, together with the stock-count records behind them.
Article 2(1)(b) goes further and requires all documents supporting the entries, including correspondence, invoices, licences and contracts related to the business, and documents containing details of any election, assessment, determination or calculation made in relation to the tax affairs of the business, including the basis or method used.
| What the regulation names | What that means for a UAE trial balance |
|---|---|
| Balance sheet and profit and loss accounts | The mapped statements, not just the raw ledger |
| Records of wages and salaries | Payroll registers reconciling to the salary accounts and to WPS files |
| Records of fixed assets | A register agreeing to the cost and accumulated depreciation accounts |
| Inventory records and stock-count sheets | Physical evidence behind the inventories balance |
| The basis of any election or calculation | Written support for depreciation rates, provisions and tax adjustments |
That final row is the one businesses in Dubai, Abu Dhabi and Sharjah most often cannot produce. The number is in the ledger; the reasoning that produced it was in somebody’s head. Recording a one-line basis alongside each judgemental balance costs minutes and closes the most common audit query in UAE files.
The reconciliations that must happen before the report is trusted
| Account | Reconcile to | How often |
|---|---|---|
| Bank current accounts | Bank statement, including dormant accounts | Monthly |
| Trade receivables | Receivables ageing that foots to the ledger | Monthly |
| Trade payables | Payables ageing, plus supplier statements where available | Monthly |
| VAT control account | The last VAT return filed with the FTA, plus movement since | Each tax period |
| Inventories | A physical count, with the count sheets retained | At least annually |
| Property, plant and equipment | Fixed asset register showing cost, additions, disposals, depreciation | Monthly |
| Provision for end-of-service benefits | An employee-by-employee calculation | Monthly |
| Related-party accounts | Confirmation from the counterparty | Annually, before the audit |
| Suspense and unallocated accounts | Zero | Monthly, without exception |
That last row is the one to enforce. A suspense account with a balance is a decision somebody postponed, and postponed decisions accumulate. Our checklist for bookkeeping clean-up before an audit works through them in order, and where the ledger has fallen far behind, catch-up bookkeeping comes first.
Record retention for the trial balance and everything behind it
Cabinet Decision No. 74 of 2023, Article 2(1)(a)(1), expressly lists balance sheet and profit and loss accounts among the accounting records and commercial books a business must keep, together with records of wages and salaries, records of fixed assets, and inventory records and statements including quantities and values at the end of each relevant tax period. In other words, the schedules behind the trial balance are named in the regulation, not merely implied.
The retention periods run alongside each other and the longest applicable one governs. Checked 5 August 2026.
| Rule | Period | Source |
|---|---|---|
| Accounting registers at the head office | At least 5 years from the end of the financial year | Federal Decree-Law No. 32 of 2021, Article 26(2) |
| Records of a taxable person | 5 years following the tax period | Cabinet Decision No. 74 of 2023, Article 3(1)(a) |
| Records of persons other than taxable persons | 5 years from the end of the calendar year created | Cabinet Decision No. 74 of 2023, Article 3(1)(b) |
| Real estate records, general | 7 years from the end of the calendar year created | Cabinet Decision No. 74 of 2023, Article 3(1)(c) |
| Corporate tax records | 7 years following the end of the tax period | Federal Decree-Law No. 47 of 2022, Article 56(1) |
| Real estate records, VAT | 15 years after the end of the tax period | VAT Executive Regulation, Article 71(2), as amended by Cabinet Decision No. 100 of 2024 |
Article 3(2) of Cabinet Decision No. 74 of 2023 adds four further years where there is a dispute with the Federal Tax Authority, four further years during an ongoing tax audit, four further years where the FTA has notified an intention to audit, and one further year where a voluntary disclosure is filed in the fifth year after a tax period. Article 4 permits electronic retention provided the information is identical to the original and a readable copy can be reproduced on request.
How the trial balance differs by UAE entity type
The columns are identical whatever the licence says. The equity block is not, and neither is the number of ledgers you are maintaining.
| Entity type | What the equity section looks like | The account most often missing |
|---|---|---|
| Dubai or Abu Dhabi mainland LLC | Share capital, statutory reserve where required, retained earnings | A shareholder current account, kept separate from trade balances |
| Free zone company in Dubai, Sharjah or Ajman | Share capital, retained earnings | Separate revenue accounts for qualifying and non-qualifying income |
| Branch of a foreign company | A head office current account, no share capital | An analysis of what the head office account contains |
| Sole establishment | An owner’s capital account that drawings reduce directly | A drawings account, so the owner’s withdrawals stop passing through expenses |
| Company with branches across several emirates | Unchanged | A departmental or branch dimension on every account |
| Tax group | Standalone books per member, aggregated for reporting | Inter-company accounts that agree in both companies’ ledgers |
The free zone row carries the most work. A Qualifying Free Zone Person holding the 0 per cent rate on qualifying income needs the split to exist in the ledger, which means it has to exist in the chart of accounts before the first invoice is raised. Retrofitting it in month eleven means re-coding a year of AED revenue by hand.
The multi-emirate row is the second. A UAE business trading from Dubai and Sharjah with one set of books and no branch dimension can produce a compliant trial balance and still be unable to answer the only question the owner cares about, which is which location makes money.
Multi-currency, and why the AED column can lie
Most UAE ledgers are maintained in AED because the trade licence, the VAT return and the corporate tax return are all denominated in AED. A business that buys in US dollars and sells in AED still has foreign currency exposure sitting inside its trial balance, and it is invisible unless the accounts are structured to show it.
| Account | Keep separate because | What happens if you do not |
|---|---|---|
| Foreign currency bank accounts | Balances must be retranslated at the reporting date | Exchange movement disappears into the cash line |
| Foreign currency trade payables | Supplier balances move with the rate | Cost of sales absorbs a currency loss silently |
| Realised exchange differences | They are a trading result | They are mistaken for margin |
| Unrealised exchange differences | They are a retranslation result | They distort a year in which nothing was settled |
The AED peg to the US dollar removes most of the volatility on dollar-denominated trade, which is why UAE businesses so often skip this structure entirely. It does nothing for euro, sterling, rupee or yuan exposure, and a UAE importer buying in one of those currencies needs the accounts above whether or not anyone has asked for them yet.
A UAE month-end close, and where the trial balance falls in it
The argument for a monthly trial balance is not tidiness. It is that an error found in thirty days can be explained by the person who made it, and an error found in fourteen months cannot.
| Working day | Task | What it fixes on the trial balance |
|---|---|---|
| 1 to 2 | Post every sales and purchase invoice for the month | Revenue and cost land in the right period |
| 2 to 3 | Reconcile every UAE bank account, including dormant AED accounts | The cash line becomes a fact rather than a balance |
| 3 | Clear the cash-in-transit account for multi-outlet businesses | Retail takings across Dubai and Sharjah stop drifting |
| 3 to 4 | Reconcile the VAT control account to the last FTA filing | Gross-of-VAT revenue is caught within weeks |
| 4 | Run payroll journals and reconcile to the WPS file | Salary accounts agree to what left the bank |
| 4 to 5 | Post the end-of-service charge employee by employee | The provision grows monthly instead of appearing in December |
| 5 | Post depreciation from the fixed asset register | The register and the ledger stay in step |
| 5 to 6 | Agree receivables and payables to ageings | Both control accounts become supportable |
| 6 | Clear suspense and unallocated accounts to nil | Postponed decisions do not accumulate |
| 6 to 7 | Run the trial balance and read it | This is the version worth trusting |
A UAE business closing on this rhythm reaches 31 December with twelve reviewed trial balances behind it. One that closes annually reaches the same date with a single unreviewed listing and a corporate tax return due within nine months of the tax period end under Article 53(1) of Federal Decree-Law No. 47 of 2022.
What an auditor will ask for, in the order they ask for it
A UAE audit rarely stalls on a technical accounting question. It stalls on documents, and the requests arrive in a predictable sequence.
| Request | What it is testing | The usual reason it takes a week to answer |
|---|---|---|
| The final trial balance, in a spreadsheet | That the ledger is complete | It is exported before the last adjustments are posted |
| The extended trial balance with adjustments | That every year-end judgement has a reason | The adjustments live only in a partner’s spreadsheet |
| Bank confirmations for every AED and foreign account | That cash exists | A dormant account nobody remembered |
| Receivables and payables ageings | That the control accounts are supportable | The ageing does not foot to the ledger |
| The fixed asset register | That capital spend was capitalised correctly | Assets bought in Abu Dhabi or Sharjah branches were expensed |
| Stock count sheets | That inventories were counted | No count was performed |
| The end-of-service calculation | That the provision is complete | It was estimated as a round AED figure |
| Related-party confirmations | That inter-company balances agree both ways | The two companies show different numbers |
| VAT returns and the control account reconciliation | That output tax was declared | Output tax on invoices never included in a return |
Every one of those requests is answerable from the reconciliation table above, prepared monthly. That is the entire argument for a monthly close in a UAE business, and it is a stronger argument than any of the software vendors make.
Where the trial balance sits in the year-end sequence
- Post everything, including the transactions nobody wants to think about.
- Run the trial balance and confirm it foots.
- Reconcile every account in the table above.
- Run it again. This one is the draft.
- Post year-end adjustments through an extended trial balance, each with a reason.
- Map the adjusted balances to IFRS line items using the written mapping.
- Produce the five statements and check that retained earnings reconciles.
- Close the year and run a post-closing trial balance to confirm the opening position.
Step four is where most of the value is. A trial balance run before reconciliation is a report about the accounting system; a trial balance run after reconciliation is a report about the business.
Our accounting and bookkeeping service is built around a monthly version of that sequence rather than an annual one, and our audit assistance service prepares the extended trial balance and the supporting schedules when an auditor is already in the file. We prepare and support financial statements; we do not audit them, and we are not a tax agent or an FTA representative.
For the whole cluster — the five statements, the standards that apply, and who must have them audited — start at UAE financial statement templates and formats. The statement that explains the movement in the cash line above is covered in cash flow statement format.
Want a trial balance that closes monthly and maps cleanly into IFRS statements? Get a quote.
Frequently asked questions
- What is a trial balance?
- A trial balance is a listing of every account in the general ledger with its closing balance shown in either a debit or a credit column, taken at a specific date. The purpose is to prove that total debits equal total credits, which is the arithmetic check built into double-entry bookkeeping. It is prepared for internal use, forms the starting point for the financial statements, and is what an auditor will ask for first. It is not itself a financial statement and it is not filed with anyone.
- What is the format of a trial balance?
- Four columns are the practical minimum: account code, account name, debit and credit. Most UAE businesses add a fifth column for the account classification — asset, liability, equity, income or expense — because that is what drives the mapping into the financial statements. The rows are usually ordered by account code, running from assets through liabilities and equity to income and expenses, and the statement ends with a total row in which the two columns are equal. Anything beyond that is a matter of preference rather than a rule.
- What errors does a trial balance not detect?
- Four kinds, and each is more common than an arithmetic mistake. An error of omission, where a transaction was never entered at all, leaves both sides equally short. An error of commission, where an amount is posted to the wrong account of the right type, moves a figure between two customers or two expense accounts. An error of principle, where a capital purchase is posted to repairs, is a classification error that balances perfectly. And a compensating error, where two mistakes happen to offset, hides both. A balanced trial balance means the double entry is complete, nothing more.
- What is the difference between a trial balance and a balance sheet?
- A trial balance is an internal worksheet listing every account with its raw balance. A balance sheet is an external statement that groups those accounts into the categories IAS 1 requires and presents only the totals, with the prior year alongside. The trial balance contains income and expense accounts as well; the balance sheet does not, because those are closed to retained earnings. One is where preparation and error-finding happen, the other is what a bank, an auditor or the FTA reads.
- What is an extended trial balance?
- An extended trial balance adds columns to the right of the initial listing: adjustments as debits and credits, then the final balances after those adjustments, then a split of the final balances between the profit and loss statement and the balance sheet. It is where year-end work actually happens — accruals, prepayments, depreciation, the expected credit loss allowance, the end-of-service provision, the corporate tax charge. Its practical value is auditability: every adjustment is visible on one page, with a reason beside it, rather than buried in the ledger as an unexplained journal.
- Do I need a trial balance for UAE corporate tax?
- You do not file one, but you cannot produce the return properly without it. Article 20 of Federal Decree-Law No. 47 of 2022 requires taxable income to be determined on the basis of adequate, standalone financial statements, and those statements are built from the trial balance. When the Federal Tax Authority asks how a figure on the return was arrived at, the answer runs back through the tax computation, into the financial statements, and into the trial balance. If the mapping between those layers is undocumented, reconstructing it later is where the time goes.
- How many accounts should a UAE small business have in its chart of accounts?
- Enough to produce the reports you are obliged to produce, and no more. Work backwards from three lists: the IAS 1 line items you must present, the boxes on the VAT return, and the corporate tax adjustments in Chapter Nine and Chapter Ten of the Corporate Tax Law. That usually lands a UAE trading SME somewhere between sixty and a hundred and twenty accounts. Fewer than that and revenue cannot be split by VAT treatment or entertainment separated for the tax computation. Far more than that, typically because customers or suppliers have been given their own ledger accounts, and the trial balance becomes unusable.
- When should a trial balance be run?
- Monthly, after the reconciliations rather than before them. A trial balance produced before bank accounts are reconciled, before the VAT control account is agreed to the last filed return, and before receivables and payables are agreed to their ageings is a draft, however neatly it foots. Running it monthly also means an error is found within thirty days of being made, when the person who made it can still remember the transaction. That is the entire argument for a monthly close.
- Does the trial balance have to be in AED?
- It has to be in the currency the ledger is maintained in, which for most UAE businesses is AED because the trade licence, the VAT return and the corporate tax return are all in AED. A company whose functional currency is genuinely another currency may keep its ledger in that currency, but it will need a conversion for tax purposes and it should expect an auditor to test the rates used. Multi-currency businesses should hold foreign currency bank and receivable accounts separately so exchange differences are visible rather than absorbed.
- How do I convert a trial balance into financial statements?
- By mapping. Assign every account to a financial statement line item, then let the mapping do the aggregation. Trade receivables, an allowance for expected credit losses and unapplied customer receipts all map to one balance sheet line; five separate salary accounts map to employee benefits expense or, under the by-function format, are split across cost of sales and administrative expenses. The mapping should be written down and reused, because the value of a financial statement is comparability, and comparability dies the moment somebody remaps an account without telling anyone.
- How long must I keep the trial balance and the records behind it?
- The longest applicable period governs. Article 26 of Federal Decree-Law No. 32 of 2021 requires accounting registers at the head office for at least five years from the end of the financial year. Article 3 of Cabinet Decision No. 74 of 2023 requires five years after the tax period for a taxable person and seven years for real estate records. Article 56 of Federal Decree-Law No. 47 of 2022 requires seven years for corporate tax purposes. Article 71(2) of the VAT Executive Regulation requires fifteen years for records relating to real estate. Article 2 of Cabinet Decision No. 74 of 2023 expressly lists balance sheet and profit and loss accounts among the records that must be kept.
- What is a post-closing trial balance?
- It is the trial balance run after the income and expense accounts have been closed to retained earnings at the year end. Only balance sheet accounts remain on it, and the total of the debit and credit columns should still agree. Its purpose is to confirm that the closing process worked and that the opening position for the new year is complete. Most modern accounting systems perform the close automatically, which is convenient right up to the point where somebody posts a correcting entry into the prior year and nobody notices that the opening balances have shifted.
Filed under: trial balance, trial balance format, bookkeeping, financial statements, IFRS, UAE accounting, chart of accounts, corporate tax
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