martin quinn notes

The Trial Balance

The trial balance

Total debit entries = Total credit entries

If the the double entry system has been applied correctly……

For each debit entry there is a credit entry.

For each credit entry there is a debit entry.

2 Martin Quinn, 2009

Purpose of the trial balance A trial balance checks that double entry system works

Used as basis for preparation of final accounts


Trial balance Once all entries have been made correctly, total debits

should equal total credits

A list of the balances on all ledger accounts in column format is called a trial balance

A trial balance checks that the double entry system is working correctly and allows the preparation of final accounts


Martin Quinn/Wood/Sangster: Business Accounting 1, 10e, © Pearson Education Limited 2005

Example Trial balanceDr Cr

Bank 1,000

Creditors 3,000

Fixed Assets 3,000

Stocks 1,200

Capital 1,200

5,200 5,200

Should the TB always balance? Yes

If not, need to check accounts/balances for errors


Trial Balance It does not balance ???

Arithmetic errors Extraction errors Posting errors one sided entry

entered twice on same side

transposed or incorrect figures


Trial Balance Will not show

Errors of omission – transaction left out completely

Errors of commission – correct amounts, wrong account(s)

Errors of principle – e.g. posted a capital expense as revenue expense

Compensating errors – errors which cancel each other out

Reversal of entries – wrong sides of each account used
