Trial Balance — Does It All Add Up?

It is Friday. Meera has spent the week learning vouchers, journal entries, and ledger posting. She has filled pages and pages with entries. Her fingers are stained with ink. Now Sharma Sir puts a blank sheet in front of her. "Meera, you have posted all entries to the ledger. You have balanced every account. But how do you know there are no mistakes? How do you know you have not accidentally put Rs. 5,000 on the debit side when it should have been on the credit side?" Meera frowns. "I check each entry again?" Sharma Sir shakes his head. "That would take forever. There is a faster way. It is called the trial balance."

What is a Trial Balance?

Remember the golden rule of double-entry accounting? For every debit, there is an equal credit. If you follow this rule perfectly, then the total of all debit balances in your ledger should equal the total of all credit balances.

A trial balance is simply a list of ALL your ledger account balances, arranged in two columns — debit balances on one side, credit balances on the other. Then you add up both columns. If they match, your books are arithmetically correct.

Think of it like a weighing scale at a sabzi mandi. You put vegetables on one side and weights on the other. If the scale is balanced, you know the measurement is correct. If it tilts, something is wrong.

A trial balance is the weighing scale of accounting.

Sharma Sir explains:

"The trial balance does not tell you everything is correct. It tells you that your debits and credits are in balance. It is a first check — like tasting the dal before serving. If the salt is wrong, you know there is a problem. But even if the salt is right, the dal might still be missing something."

We will come back to what the trial balance cannot catch. First, let us learn how to prepare one.

The Trial Balance Format

The trial balance is a simple table:

Each row is one ledger account. You write its closing balance in either the debit column or the credit column — never both.

• Assets (Cash, Bank, Debtors, Furniture, Stock) → Debit column
• Expenses (Purchases, Rent, Salary, Electricity) → Debit column
• Drawings → Debit column
• Liabilities (Creditors, Loans) → Credit column
• Income (Sales, Commission, Interest Received) → Credit column
• Capital → Credit column

Meera Prepares Her First Trial Balance

Let us use the ledger accounts Meera created from the July 15th transactions. She balanced each account and found the following closing balances:

Wait — where did the Capital of Rs. 27,500 come from? This is Rawat Aunty's opening capital. It represents the owner's investment in the business. At the start of the period, the business had Rs. 25,000 cash and Rs. 2,500 receivable from Dimri Ji. That totals Rs. 27,500, which is the owner's equity.

Now Meera writes the trial balance:

Trial Balance of Rawat General Store as on 15th July 2025

Meera adds up the columns:

• Debit total: 4,300 + 5,000 + 3,500 + 20,000 + 4,000 + 5,000 + 1,200 + 2,000 = 45,000
• Credit total: 9,500 + 8,000 + 27,500 = 45,000

They match!

Meera lets out a breath. "It balances!"

Sharma Sir smiles. "Good. This means your journal entries were correct, your posting was correct, and your balancing was correct. The trial balance confirms it."

What Does the Trial Balance Prove?

The trial balance proves arithmetical accuracy. It confirms that:

1. Every debit entry in the journal was posted to the debit side of the correct ledger account.
2. Every credit entry was posted to the credit side.
3. The accounts were balanced correctly.
4. No entry was posted on only one side (which would throw things off).

In simple words: the math is right.

What the Trial Balance Does NOT Prove

This is very important. Sharma Sir makes Meera write this down twice.

"The trial balance is not perfect, Meera. There are some mistakes it CANNOT catch. Even if the trial balance matches, there could still be errors in your books."

Here are the errors that can hide even when the trial balance balances:

1. Error of Omission

A transaction was completely forgotten — not recorded in the journal at all.

Example: Rawat Aunty paid Rs. 300 for shop cleaning but Meera forgot to record it. Since it was never entered anywhere — neither debit nor credit — the trial balance still balances. But the books are wrong.

2. Error of Commission

The entry was made in the wrong person's account, but the right type of account.

Example: Meera received Rs. 2,500 from Dimri Ji but accidentally wrote it in Joshi Ji's account. Both are debtor accounts. The trial balance still balances. But Dimri Ji's records are wrong, and Joshi Ji's records are wrong.

3. Error of Principle

The entry was posted to the wrong type of account.

Example: Rawat Aunty buys a new wooden shelf for Rs. 3,000. This is furniture — an asset. But Meera records it as "Purchases." The trial balance still balances (both are debit entries). But the Purchases figure is too high, and the Furniture figure is missing.

4. Compensating Errors

Two different mistakes cancel each other out.

Example: Meera debited Rent A/c Rs. 500 extra, and separately credited Sales A/c Rs. 500 extra. The two errors cancel out. The trial balance still balances. But both Rent and Sales are wrong.

5. Error of Original Entry

The wrong amount was used for both debit and credit.

Example: Rawat Aunty paid Rs. 1,200 for electricity, but Meera recorded it as Rs. 1,400 in both the debit and credit. The trial balance balances (Rs. 1,400 = Rs. 1,400). But the actual amount is wrong.

6. Error of Reversal

The right accounts were used but on the wrong sides.

Example: Meera debited Cash and credited Sales (correct). But for the next entry, she debited Sales and credited Cash (reversed). The totals might still balance, but individual entries are wrong.

Sharma Sir says:

"This is why the trial balance is a first check, not the final check. Think of it like a medical test. If your blood pressure is normal, it does not mean you are perfectly healthy. But if it is abnormal, you definitely know something is wrong."

When the Trial Balance Does NOT Match

Now let us talk about what happens when the two columns do NOT add up to the same number. This means there IS an error. Here is how to find it.

Step 1: Re-add the columns

Simple arithmetic errors are the most common. Add the debit column again. Add the credit column again. Use a calculator if needed.

Step 2: Find the exact difference

Subtract the smaller total from the larger one. This difference gives you clues.

Step 3: Use the difference to find the error

Sharma Sir teaches Meera three tricks:

Trick 1: Is the difference divisible by 2?

If yes, divide it by 2. Look for that amount. You may have posted an entry on the wrong side.

Example: Debit total is Rs. 47,000 and credit total is Rs. 45,000. Difference = Rs. 2,000. Half of 2,000 = Rs. 1,000. Look for an entry of Rs. 1,000. You may have put it on the debit side when it should have been on the credit side (or vice versa). This doubles the error — hence the difference is twice the amount.

Trick 2: Is the difference divisible by 9?

If yes, you may have a transposition error — you switched two digits.

Example: You wrote Rs. 5,400 instead of Rs. 4,500. Difference = 5,400 - 4,500 = 900. And 900 / 9 = 100. This confirms a transposition error. Look for entries where digits may have been swapped.

Other transposition examples:

• 81 instead of 18: difference = 63, and 63 / 9 = 7
• 3,200 instead of 2,300: difference = 900, and 900 / 9 = 100

Trick 3: Is the difference the exact amount of one entry?

If yes, you may have forgotten to post that entry entirely (posted only the debit but not the credit, or vice versa).

Example: Difference is exactly Rs. 5,000. Check if there is a journal entry for Rs. 5,000 where one side was not posted.

Step 4: Check the ledger balances

Make sure each ledger account was balanced correctly. A simple addition mistake in one account can throw off the entire trial balance.

Step 5: Check the journal

Go back and verify that every journal entry has equal debits and credits.

A Practice Scenario: Finding the Error

Negi Bhaiya gives Meera a test. He hands her a trial balance that does not match:

Difference = Rs. 46,400 - Rs. 45,500 = Rs. 900

Is 900 divisible by 9? Yes! 900 / 9 = 100.

This suggests a transposition error. Meera checks each amount against the ledger. She finds that Salary Account was actually Rs. 2,700 in the ledger, but the journal showed Rs. 2,700 when the actual payment was Rs. 3,600. Wait — let us think again.

Actually, Meera checks the Debtors ledger and finds that the balance should be Rs. 7,200 but was posted from a journal entry of Rs. 2,700. Hmm, let her try again.

She checks the Salary Account. The ledger shows Rs. 2,700. But when she looks at the original voucher, it says Rs. 2,700. That is fine.

She then checks Rent Account. The ledger shows Rs. 3,000. The journal entry shows Rs. 3,000. The voucher shows Rs. 3,000. Fine.

Wait — she goes to the Sales Account. The ledger balance is Rs. 12,000. But she re-adds the credit entries: Rs. 1,800 + Rs. 3,500 + Rs. 4,200 + Rs. 3,400 = Rs. 12,900. Not Rs. 12,000! Someone wrote Rs. 12,000 instead of Rs. 12,900. The difference is Rs. 900. And 900 / 9 = 100. Classic transposition error — the digits were rearranged.

Correcting Sales to Rs. 12,900:

• Debit total: Rs. 46,400
• Credit total: Rs. 30,000 + Rs. 12,900 + Rs. 3,500 = Rs. 46,400

It matches now.

Negi Bhaiya grins. "You found it. Good detective work."

When to Prepare a Trial Balance

In practice, businesses prepare a trial balance:

• Monthly — to check that the month's entries are correct
• Quarterly — especially before filing GST returns
• Yearly — before preparing final accounts (Profit & Loss and Balance Sheet)

For Rawat Aunty's small shop, a monthly trial balance is enough. For Bisht Traders, who has more transactions, Sharma Sir likes to check quarterly.

The Suspense Account — A Temporary Fix

What if you cannot find the error right away? Sharma Sir teaches Meera a practical trick:

"If the trial balance does not match and you have spent a reasonable time looking, open a temporary account called Suspense Account. Put the difference there. This makes the trial balance balance for now. But remember — the Suspense Account is like a bandage, not a cure. You MUST find and fix the error eventually."

Example: Debit total = Rs. 46,400, Credit total = Rs. 45,500. Difference = Rs. 900. Credits are short by Rs. 900.

Later, when you find the error, you close the Suspense Account. In Meera's case, once she found the Sales error, the Suspense Account was no longer needed.

Trial Balance — A Visual Summary

Here is how the trial balance fits into the accounting cycle:

  Voucher  →  Journal  →  Ledger  →  Trial Balance
  (Proof)     (Record)    (Organize)   (Check)

1. Voucher — The original proof that something happened.
2. Journal — Record the transaction in order.
3. Ledger — Organize by account.
4. Trial Balance — Check that everything adds up.

And after the trial balance? The next step is preparing the final accounts — the Profit & Loss Account and the Balance Sheet. That comes in the next chapter.

Quick Recap

• A trial balance is a list of all ledger account balances in two columns: Debit and Credit.
• If Total Debits = Total Credits, the books are arithmetically correct.
• Assets, Expenses, and Drawings go in the Debit column.
• Liabilities, Income, and Capital go in the Credit column.
• The trial balance proves arithmetical accuracy.
• It does NOT prove that all entries are correct — it cannot catch errors of omission, commission, principle, compensation, original entry, or reversal.
• If the trial balance does NOT match, check: divisible by 2 (wrong side), divisible by 9 (transposition), or exact amount (missed posting).
• A Suspense Account is a temporary fix for unresolved differences.
• Always find and fix the actual error. The Suspense Account is not a solution — it is a bookmark.

Practice Exercise — Try This Yourself

Part A: Prepare the Trial Balance

Using the ledger accounts you prepared in the previous chapter's practice exercise (8 transactions on 20th July 2025), prepare a trial balance. List each account and its balance.

Your trial balance should include:

• Cash Account
• SBI Bank Account
• Capital Account
• Furniture Account
• Purchases Account
• Sales Account
• Bisht Traders Account
• Dimri Ji Account
• Miscellaneous Expense Account

Do the totals match?

Part B: Find the Error

The following trial balance has an error. Find it.

It balances! But there is an error hidden in it. Sharma Sir tells you that the actual salary paid was Rs. 4,500, not Rs. 5,400. And the actual debtors balance is Rs. 8,100.

What type of error is this? (Hint: 5,400 - 4,500 = 900. Is 900 divisible by 9?)

Fun Fact

The trial balance was invented because humans make mistakes. Even the most careful accountant can slip up after hours of writing numbers. Before computers, accountants in India would prepare trial balances under the light of kerosene lamps, carefully adding long columns by hand. If the balance did not match, they would sometimes work late into the night, checking entry after entry. Today, accounting software prepares the trial balance automatically in one click. But understanding how it works — as Meera now does — means you can spot problems that even the software might miss.

In the next chapter, Meera takes the trial balance and uses it to prepare the final accounts — the Profit & Loss Account and the Balance Sheet. This is where all the numbers come together to answer the big question: "Is the business making money?"