What a trial balance is for
A trial balance is a list, usually in the order assets, liabilities, owner's capital, withdrawals, revenue and expenses, with one column for debit balances and one for credit balances. If every entry was recorded with equal debits and credits, the two column totals must match.
A matching trial balance does not prove the books are perfect. It will not catch an entry posted to the wrong account or an entry left out entirely. But a trial balance that does not match proves there is a mistake, and the size of the gap gives clues about where to look.
Practice problem: the 12 ledger balances
Lakeside Design Studio is an invented one-owner business. At the end of the month its ledger shows the balances below. Put each one in the debit column or the credit column, then add the columns.
Cash: 14,200 (an asset).
Accounts Receivable: 5,300 (an asset).
Supplies: 800 (an asset).
Prepaid Insurance: 1,200 (an asset).
Equipment: 12,000 (an asset).
Accounts Payable: 3,900 (a liability).
Unearned Revenue: 1,500 (a liability).
Owner's Capital: 20,000.
Owner's Withdrawals: 2,000.
Service Revenue: 15,600.
Rent Expense: 3,600.
Salaries Expense: 1,900.
Before you look below, decide the normal side of each account. Assets, withdrawals and expenses normally have debit balances. Liabilities, capital and revenue normally have credit balances.
Answers: the trial balance
Debit column: Cash 14,200 / Accounts Receivable 5,300 / Supplies 800 / Prepaid Insurance 1,200 / Equipment 12,000 / Owner's Withdrawals 2,000 / Rent Expense 3,600 / Salaries Expense 1,900.
Credit column: Accounts Payable 3,900 / Unearned Revenue 1,500 / Owner's Capital 20,000 / Service Revenue 15,600.
Total debits: 14,200 plus 5,300 plus 800 plus 1,200 plus 12,000 plus 2,000 plus 3,600 plus 1,900 equals 41,000.
Total credits: 3,900 plus 1,500 plus 20,000 plus 15,600 equals 41,000.
The totals tie at 41,000 on each side, so this trial balance is in balance.
Version two: a trial balance that does not tie
Now suppose the person copying the balances made one mistake. The Accounts Receivable balance of 5,300 was copied as 5,030, and everything else is unchanged.
New total debits: 41,000 less 270 equals 40,730. Total credits are still 41,000. The credit column is higher by 270.
Find the clue. Start with the difference, 270. Check whether it divides evenly by 9. It does, because 270 divided by 9 is 30. A difference that divides evenly by 9 often points to a transposition (two digits swapped) or a slide (a decimal point in the wrong place). Here the digits 3 and 0 were swapped in 5,300 to make 5,030. Scan your list for an amount where two digits could be swapped, and compare it with the ledger.
Fix: change Accounts Receivable back to 5,300. Debits become 41,000 and the totals tie.
More worked examples of the three error types
Slide error. Suppose Rent Expense of 3,600 was copied as 360. Debits fall by 3,600 less 360, which is 3,240, so the credit column is higher by 3,240. Divide 3,240 by 9 and you get 360, which is the wrong number that was written down. That pattern, a difference that is nine times a number in your list, is a strong sign of a slide.
Transposition error. The test is the same one used in version two. The difference divides by 9, and the digits of the two numbers involved are the same but in a different order.
Single-sided entry. Suppose a 600 cash purchase of supplies was posted as a debit to Supplies, but the credit to Cash was never posted. Cash would show 14,800 instead of 14,200, so debits would be 41,600 against credits of 41,000, a gap of 600. The clue is that the difference equals a whole transaction. Look through the journal for an amount of exactly 600 and check that both sides were posted.
Debit posted as a credit. Suppose the Prepaid Insurance balance of 1,200 was put in the credit column. Debits would fall to 39,800, credits would rise to 42,200, and the gap is 2,400. A gap that is exactly twice a balance in your list is a strong hint that this balance is in the wrong column. Half of 2,400 is 1,200.
How to check your work
Add each column twice, once from the top and once from the bottom. Many ties fail because of simple addition mistakes.
If the columns differ, write down the difference first. Then ask: is it divisible by 9, is it half of a balance in the list, does it equal a whole transaction, or is it a number you can find in the ledger?
Confirm each account is in its normal column. A debit balance for revenue or a credit balance for Cash needs a second look.
Check that all 12 accounts were included. A missing account makes the totals differ by that account's balance.
Retrace postings in the journal for the biggest and most recent entries first, because that is where most slips happen.
What a tie does not tell you
Even a perfectly matching trial balance can hide mistakes. If a 400 payment of rent was debited to Salaries Expense instead of Rent Expense, both columns would still be equal. If a transaction was never recorded at all, the books would still balance. A trial balance tests the arithmetic of debits and credits, not whether each entry was right.
That is why accountants still review source documents, reconcile bank accounts and compare statements. The trial balance is a first check, not the last one.
Practice next
Try rebuilding the trial balance yourself with new amounts, then plant your own error and have a friend find it. For a spreadsheet that builds the trial balance from journal entries and flags a mismatch, see the Accounting Student Study Workbook toolkit on this site.
Common questions
Why must the trial balance totals match?
Every journal entry has equal debits and credits. If every entry was posted correctly, the sum of all debit balances equals the sum of all credit balances.
What if the difference is not divisible by 9?
Then it is probably not a simple transposition or slide. Check for a single-sided entry, an account in the wrong column, an omitted account, or an addition mistake.
Does the trial balance have to be in a particular order?
The usual order is assets, liabilities, owner's capital, withdrawals, revenue and expenses. Some courses use the chart of accounts number order. Follow your instructor's format.
This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation.