What is a trial balance?
A trial balance is a list of every account in the general ledger with its closing debit or credit balance at a particular date. Because each journal entry has equal debits and credits, total debits should equal total credits. It is the working document from which adjustments are made and the financial statements are prepared.
Also calledTB
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- Lists
- Every ledger account balance
- Check
- Total debits equal total credits
- Versions
- Unadjusted, adjusted, post-closing
How a trial balance works
The trial balance is run from the ledger at period end. The unadjusted trial balance is the first run; accountants then post adjusting entries, such as accruals, prepayments and depreciation, to produce the adjusted trial balance, and each account is mapped to a line of the profit and loss statement or balance sheet. Auditors start from the client's trial balance and import it into their working paper software. A balancing trial balance does not prove the books are right: an entry posted to the wrong account, left out entirely or entered with the same wrong amount on both sides still balances. Those errors are found through reconciliations and review. In manual systems a trial balance that did not balance was the main signal of a posting error; ledger software rejects unbalanced entries, so its value now lies in review and mapping.
Common questions
What errors does a trial balance not find?+
Errors that leave debits and credits equal: a transaction left out, posted to the wrong account, recorded at the wrong amount on both sides, or two errors that cancel out. Reconciliations and review catch these.
What is an adjusted trial balance?+
The trial balance after period-end adjustments such as accruals, prepayments, depreciation and provisions have been posted. The financial statements are prepared from it.
What is a post-closing trial balance?+
The trial balance after income and expense accounts have been closed to retained earnings at year end. Only balance sheet accounts remain, and they become the opening balances for the new year.
Software that produces and uses the trial balance
XeroCloud accounting for small businesses with a large app ecosystem.Profile →
Intuit QuickBooksSmall business accounting covering books, invoicing and payroll.Profile →
NetSuiteCloud ERP for mid-market companies outgrowing basic accounting.Profile →
CasewareAudit working papers and financial statement preparation.Profile →
SilverfinStandardised client data for compliance and advisory work.Profile →Part of Accountio’s accounting technology coverage · Glossary
