Trial balance · Trial Balance

New to this topic?

What it is: A list of the balance on every account, in two columns: debit and credit.

Why you need it: Every transaction was entered as a debit and a credit of the same amount. So the two column totals should be equal. If they are not equal, there is a mistake.

What you do: Balance every account. Put each balance in the debit or credit column. Add up both columns and compare the totals.

Important: Equal totals do not prove everything is correct. Some mistakes, such as leaving a transaction out completely, still give equal totals.

Example. The debit column adds up to £12,000. The credit column adds up to £11,800. The difference is £200. There is a mistake, and you need to find it.

Key words

Trial balance: A list of the balances on every account at a date, in a debit column and a credit column. Both columns should add up to the same total.Example: Debits total £5,850 and credits total £5,850, so the trial balance agrees.
Normal balance: The side (debit or credit) that an account’s balance is usually on. Assets and expenses are normally debit. Liabilities, income and capital are normally credit.Example: The Cash account normally has a debit balance. Trade payables normally has a credit balance.
Error of omission: A transaction that was left out of the books completely. The trial balance still agrees, because neither side was recorded.Example: A £200 rent payment that nobody recorded.

Learn

A trial balance is a list of every account’s balance on one date. Each balance goes in either the debit column or the credit column. Every entry was made with an equal debit and credit, so the two column totals should be the same.

Which column does each balance go in?

Debit column: assets, expenses, purchases, drawings. Credit column: liabilities, income, capital. This is the same DEAD CLIC rule.

Example: Cash £2,000 goes in the debit column (asset). A bank loan of £5,000 goes in the credit column (liability).

Mistakes a trial balance does not find

These mistakes still give equal totals, so the trial balance will not show them:

Name of the error	What happened	Example
Omission	The transaction was not recorded at all	A £200 sale was never entered
Commission	The right type of account, but the wrong one	Posted to J Smith instead of J Smyth
Principle	The wrong type of account	A new van (asset) debited to Motor expenses
Original entry	The wrong amount was used on both sides	£540 recorded as £450 in both accounts
Complete reversal	The right accounts, but debit and credit swapped	Debit Sales, credit Cash for a cash sale
Compensating	Two mistakes of the same size cancel out	Rent £100 too high and Sales £100 too high

How to find a difference

Add up both columns again.
Divide the difference by 2. Look for a balance of that amount. It may be in the wrong column.
If the difference divides exactly by 9, look for two digits swapped round. Example: £1,260 written as £1,620. The difference is £360, and £360 ÷ 9 = £40.
Look for a balance that has been left off the list.

Remember. Equal totals only show that the debits and credits are equal. They do not prove every entry is correct.

Watch it explained

Press play to watch the animation, or step through it at your own pace with the arrows.

Videos from YouTube tutors

These videos are made by independent tutors on YouTube, not by Trial Balance. They may use slightly different terms, for example “owner’s equity” instead of “capital”.

Worked example

Account	Dr £	Cr £
Cash	450
Equipment	5,000
Wages	400
Capital		4,000
Bank loan		1,000
Sales		850
Totals	5,850	5,850

Practice questions

Type or choose your answers, then press Check answer. Questions with a New numbers button can be repeated with different figures.