Trial balance

A trial balance lists every ledger account with its balance on a given date, in two columns: debit and credit. In double-entry bookkeeping, every transaction has a debit side and a credit side of equal value, so the two columns should total the same. If they do not, there is an error somewhere in the books.

Example

This small trading business has Rs 1,000,000 on each side, so the trial balance agrees. If the munshi had entered a Rs 25,000 payment to a supplier in the cash book but forgotten to post it to the supplier's ledger, the columns would differ by Rs 25,000 and point him to look for it.

Why it matters

The trial balance is the starting point for the profit and loss statement and balance sheet. It is also a quick health check: an accountant looks at it first. Note that a balanced trial balance does not prove the books are right. An entry posted to the wrong customer still balances.

How software handles it

When bookkeeping is done in software, each sale, purchase and payment posts both sides at once, so the columns cannot drift apart from a forgotten posting. That leaves the more useful question: are the entries themselves correct? Clean ledgers for parties and cash make that easier to answer.