Accounting > Trial Balance

### Trial Balance

If the journal entries are error-free and were posted properly to the general ledger, the total of all of the debit balances should equal the total of all of the credit balances. If the debits do not equal the credits, then an error has occurred somewhere in the process. The total of the accounts on the debit and credit side is referred to as the trial balance.

To calculate the trial balance, first determine the balance of each general ledger account as shown in the following example:

#### General Ledger

Cash

 Sep 1 7500 17 400 25 425
 Sep 15 1000 28 500

Bal.    6825

Accounts Receivable

 Sep 17 700
 Sep 25 425

Bal.    275

Parts Inventory

 Sep 8 2500
 Sep 18 275

Bal.    2225

Accounts Payable

 Sep 28 500
 Sep 8 2500

Bal.    2000

Capital

 Sep 1 7500

Bal.    7500

Revenue

 Sep 17 1100

Bal.    1100

Expenses

 Sep 15 1000 Sep 18 275

Bal.    1275

Once the account balances are known, the trial balance can be calculated as shown:

#### Trial Balance

 Account Title Debits Credits Cash 6825 Accounts Receivable 275 Parts Inventory 2225 Accounts Payable 2000 Capital 7500 Revenue 1100 Expenses 1275 10600 10600

In this example, the debits and credits balance. This result does not guarantee that there are no errors. For example, the trial balance would not catch the following types of errors:

• Transactions that were not recorded in the journal
• Transactions recorded in the wrong accounts
• Transactions for which the debit and credit were transposed
• Neglecting to post a journal entry to the ledger

If the trial balance is not in balance, then an error has been made somewhere in the accounting process. The following is listing of common errors that would result in an unbalanced trial balance; this listing can be used to assist in isolating the cause of the imbalance.

• Summation error for the debits and credits of the trial balance
• Error transferring the ledger account balances to the trial balance columns
• Error in numeric value
• Error in transferring a debit or credit to the proper column
• Omission of an account
• Error in the calculation of a ledger account balance
• Error in posting a journal entry to the ledger
• Error in numeric value
• Error in posting a debit or credit to the proper column
• Error in the journal entry
• Error in a numeric value
• Omission of part of a compound journal entry

The more often that the trial balance is calculated during the accounting cycle, the easier it is to isolate any errors; more frequent trial balance calculations narrow the time frame in which an error might have occurred, resulting in fewer transactions through which to search.

Accounting > Trial Balance

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