A trial balance is a statement prepared at a particular date showing all the debit balances on one column and all the credit balances on another column.
NOTE: A trial balance is not an account but merely a list of assets, expenses and losses on the left and capital liabilities and incomes (including profits) on the right.
-The totals of a trial balance should agree if the double entry has been carried out correctly and there are no arithmetic errors both in the ledger as well as in the trial balance itself.
-If the two sides of a trial balance are not equal, it means there is an error or errors either in the trial balance or in the ledger accounts or in both.
Errors that may cause a trial balance not to balance
- Partial omission: A transaction was recorded on only one account i.e. a debit or a credit entry might have been omitted in one of the affected accounts.
- Transferring (posting): a wrong balance to a trial balance.
- Different amounts for the same transaction might have been entered in the accounts(Amount Dr.different from amount cr)
- Failure to post a balance to the trial balance (omission of a balance from the trial balance
- Posting a balance to the wrong side of the trial balance
- Recording a transaction on the same side of the affected accounts(partial reversal entry)
- Arithmetic mistakes might have been made when balancing the ledger accounts
- Arithmetic errors in balancing the trial balance