Trial balance: preparation and solved example

If every debit had an equal credit, the list of all debit balances must total the same as the list of all credit balances. The trial balance tests exactly that.

What it is

A trial balance is a statement that lists the balances of all ledger accounts on a given date, debit balances in one column and credit balances in the other. It is prepared to check the arithmetical accuracy of the books and to give the figures for the final accounts. It is a statement, not an account, and it is not part of the double entry.

How to prepare it (balance method)

Balance every account in the ledger, including the cash book.
List each account with a debit balance in the debit column and each with a credit balance in the credit column. Accounts with no balance are left out.
Total both columns. They should agree.

A quick guide to which side a balance belongs on:

Debit column	Credit column
Assets: cash, bank, stock, debtors, furniture, machinery, bills receivable	Liabilities: creditors, loans, bank overdraft, bills payable, outstanding expenses
Expenses and losses: purchases, wages, rent, salaries, carriage, bad debts, discount allowed	Incomes and gains: sales, commission received, interest received, discount received
Drawings	Capital
Sales return (return inwards)	Purchases return (return outwards)
Opening stock	Provisions and reserves

Closing stock does not appear in the trial balance in the usual case, because it is not yet in the ledger; it is given as an adjustment.

Solved example: Arjun Traders, 30 April 2026

The balances come from the ledger posted from the journal.

Trial Balance of Arjun Traders as at 30 April 2026
Name of account	Dr. (₹)	Cr. (₹)
Cash A/c	1,49,500
Bank A/c	93,000
Purchases A/c	60,000
Furniture A/c	25,000
Sales Return A/c	2,000
Discount Allowed A/c	500
Drawings A/c	6,000
Salaries A/c	15,000
Rent A/c	8,000
Capital A/c		3,00,000
Sales A/c		58,000
Discount Received A/c		1,000
Total	3,59,000	3,59,000

Both columns total ₹3,59,000, so the books are arithmetically correct. Kabir and Nisha & Co. do not appear because their accounts are settled.

If the trial balance does not agree

Re-total both columns.
Check that no account has been left out and that each balance is in the correct column.
Find the difference. Halve it and look for a balance of that amount on the wrong side. Divide it by 9: if it divides exactly, two digits may have been swapped (for example 540 written as 450).
Check the balancing of each ledger account, then the posting from the subsidiary books, then the totals of the subsidiary books.
If the difference is still not found, put it in a Suspense A/c for the time being and continue. See rectification of errors.

Errors a trial balance reveals

Wrong totalling of a subsidiary book or an account.
Posting an amount on the wrong side.
Posting a wrong amount on one side only.
Leaving out one side of an entry.
Wrong balancing of an account, or a balance written in the wrong column.

Errors it cannot show

A trial balance that agrees is not proof that the books are right. Four kinds of error leave it undisturbed:

Error	Meaning	Example
Error of omission	A transaction is left out of the books altogether.	A credit sale of ₹5,000 is never recorded.
Error of commission	The right amount is posted to the wrong account of the same kind.	Cash from Mohan is credited to Sohan.
Error of principle	A rule of accounting is broken.	Furniture bought is debited to Purchases A/c.
Compensating errors	Two or more errors cancel each other.	Rent overstated by ₹100 and wages understated by ₹100.

An entry recorded with a wrong amount in the book of original entry, for instance a sale of ₹870 entered as ₹780 in the sales book, also escapes, because both sides carry the same wrong figure.

Uses

It checks arithmetical accuracy.
It gathers all balances in one place, so final accounts can be prepared without turning ledger pages.
It helps in locating errors.

From the trial balance, the next step is the final accounts.

Questions students ask

Is a trial balance an account?

No. It is a statement listing ledger balances. It has no debit and credit sides in the ledger sense and is not part of the double entry system.

Does an agreed trial balance prove the books are correct?

No. Errors of omission, commission and principle, and compensating errors, do not affect its agreement.

Where does closing stock appear in the trial balance?

Usually it does not appear, because it is valued at the year end and has no ledger account yet. It is given as an adjustment and shown in the Trading Account and the Balance Sheet.