Trial Balance
Verifying that debits equal credits
Why This Matters
Imagine you're reconciling a bank account. You have 347 transactions. Do you manually check each one? No. You compare your total to the bank's total. If they match, you're probably fine. If they don't, you know something's wrong and you dig deeper.
That's what a trial balance is for accounting—the verification step that catches errors before they poison your entire financial statement.
Without a trial balance, you could record thousands of transactions with mistakes hiding in plain sight. With it, you have a simple check: Do total debits equal total credits? If yes, your recording is mechanically sound. If no, there's an error to find.
A trial balance isn't perfect, but it's the first line of defense against accounting chaos.
What Is a Trial Balance?
A trial balance is a list of all accounts in the general ledger with their debit or credit balances, used to verify that total debits equal total credits.
Think of it like a scoreboard:
Each account
= A team's score
Debits
= Points on the left
Credits
= Points on the right
Trial balance
= Final tally of all scores
If left ≠ right, someone made a scorekeeping error.
Why It Works: The Double-Entry Principle
Remember: In double-entry accounting, every debit has a corresponding credit.
The Rule:
Every Transaction:
Debit: $X
Credit: $X
Total of all transactions:
Total Debits = Total Credits ✓
If Trial Balance shows:
Total Debits ≠ Total Credits ✗
Then: There's an error somewhere
This means total debits recorded should equal total credits in the ledger. If they don't, something went wrong during recording or posting.
How to Prepare a Trial Balance
List All Accounts
Pull every account from the general ledger.
Write Their Balances
For each account, calculate the balance (total debits minus credits for debit-balance accounts, or credits minus debits for credit-balance accounts).
Place in Correct Column
Accounts with debit balances go in the Debit column. Accounts with credit balances go in the Credit column.
Total Both Columns
Add up all debits. Add up all credits.
Verify They Match
If debits = credits, you're good. If not, there's an error.
Real-World Example: ABC Coffee Shop
Let's say ABC Coffee Shop has these accounts and balances at January 31, 2026:
Account Balances:
TRIAL BALANCE
ABC Coffee Shop - January 31, 2026
| Account Name | Debit | Credit |
|---|---|---|
| Cash | $5,000.00 | |
| Accounts Receivable | $2,000.00 | |
| Equipment | $15,000.00 | |
| Accounts Payable | $3,000.00 | |
| Owner's Equity | $17,000.00 | |
| Sales Revenue | $8,000.00 | |
| Rent Expense | $2,000.00 | |
| Salary Expense | $3,000.00 | |
| Supplies Expense | $1,000.00 | |
| Totals | $28,000.00 | $28,000.00 |
What a Trial Balance Shows (And Doesn't Show)
What It Shows ✓
- All accounts are listed
Nothing is hidden
- Each account's balance
You can see where every account stands
- Total debits = Total credits
Mechanical accuracy is verified
- Structure of the ledger
You can see what accounts exist
What It DOESN'T Show ✗
- Wrong accounts
Rent recorded as Supplies still balances
- Duplicates
Same sale recorded twice still balances
- Omissions
Missing transactions still balance
- Both sides wrong
$5,000 as $6,000 on both sides still balances
Example: Trial Balance Catches an Error
Let's say the accountant for ABC Coffee Shop makes a mistake recording a $1,000 rent payment:
The Mistake:
Rent Expense $1,000
Cash $500
(WRONG: Debit ≠ Credit)
When they prepare the trial balance, they'll get:
TRIAL BALANCE (With Error)
ABC Coffee Shop
| Account Name | Debit | Credit |
|---|---|---|
| Cash ($5,000 - $500) | $4,500.00 | |
| Accounts Receivable | $2,000.00 | |
| Equipment | $15,000.00 | |
| Accounts Payable | $3,000.00 | |
| Owner's Equity | $15,000.00 | |
| Sales Revenue | $8,000.00 | |
| Rent Expense ($2,000 + $1,000) | $3,000.00 | |
| Salary Expense | $3,000.00 | |
| Supplies Expense | $1,000.00 | |
| Totals | $28,500.00 | $26,000.00 |
The trial balance doesn't balance! This tells the accountant there's an error. They dig deeper, find the unbalanced entry, and fix it.
Common Errors Caught by Trial Balance
Transposed Numbers
You write the numbers in the wrong order.
Should be: Cash $2,457
You wrote: Cash $2,475
Wrong Side of Account
You post a debit to the credit side or vice versa.
❌ Both on left side!
✓ Should be: DR left, CR right
Wrong Amount Posted
You record $500 in the journal but post $5,000 to the ledger.
Journal: $500
Ledger: $5,000
(Amounts don't match)
Forgot to Post
You record a journal entry but forget to post it to the ledger.
Journal shows: $3,000
Ledger shows: $0
(Entry never made it to ledger)
Different Trial Balance Formats
Traditional Format
TRIAL BALANCE
Company Name
Date
Account Number Format
Running Balance Format
Trial Balance at Different Points in the Cycle
After posting all journal entries, before adjusting entries.
Purpose:
Verify that basic recording was correct
Shows:
Raw account balances from transactions
Real Example: All Three Trial Balances
Let's follow ABC Consulting through all three:
1Initial Trial Balance (Jan 31)
INITIAL TRIAL BALANCE
ABC Consulting - January 31, 2026
| Account Name | Debit | Credit |
|---|---|---|
| Cash | $15,000.00 | |
| Equipment | $10,000.00 | |
| Accounts Payable | $5,000.00 | |
| Owner's Equity | $15,000.00 | |
| Revenue | $8,000.00 | |
| Rent Expense | $2,000.00 | |
| Salary Expense | $1,000.00 | |
| Totals | $28,000.00 | $28,000.00 |
Adjusting Entries Made:
- • Insurance: $100 expired
- • Depreciation: $83.33
- • Accrued salary: $500
2Adjusted Trial Balance (Jan 31)
ADJUSTED TRIAL BALANCE
ABC Consulting - January 31, 2026
| Account Name | Debit | Credit |
|---|---|---|
| Cash | $15,000.00 | |
| Equipment | $10,000.00 | |
| Accumulated Depreciation | $83.33 | |
| Prepaid Insurance | $1,100.00 | |
| Accounts Payable | $5,000.00 | |
| Salaries Payable | $500.00 | |
| Owner's Equity | $16,200.00 | |
| Revenue | $8,000.00 | |
| Rent Expense | $2,000.00 | |
| Salary Expense | $1,500.00 | |
| Insurance Expense | $100.00 | |
| Depreciation Expense | $83.33 | |
| Totals | $29,783.33 | $29,783.33 |
Closing Entries Made:
Zero out: Revenue, Rent Exp, Salary Exp, Insurance Exp, Depreciation Exp
3Post-Closing Trial Balance (Jan 31)
POST-CLOSING TRIAL BALANCE
ABC Consulting - January 31, 2026
| Account Name | Debit | Credit |
|---|---|---|
| Cash | $15,000.00 | |
| Equipment | $10,000.00 | |
| Accumulated Depreciation | $83.33 | |
| Prepaid Insurance | $1,100.00 | |
| Accounts Payable | $5,000.00 | |
| Salaries Payable | $500.00 | |
| Owner's Equity | $20,516.67 | |
| Totals | $26,100.00 | $26,100.00 |
Notice: Only balance sheet accounts remain. Revenue and expense accounts are gone (closed to equity).
Finding Errors: Trial Balance Detective Work
If your trial balance doesn't balance, here's how to find the error:
Recalculate the Totals
Maybe you just added wrong.
Verify Each Account Balance
Go to the general ledger for each account and manually verify the balance is correct.
Look for Reversals
Check if a debit was recorded as a credit or vice versa.
Look for Transpositions
Check if numbers are in the wrong order (e.g., 54 vs 45).
Check for Omissions
Verify that all journal entries were actually posted to the ledger.
Limitations: What Trial Balance CANNOT Catch
Incorrect Account Used
Trial balance still balances! Debits = Credits, but account is wrong.
Duplicate Entry
Trial balance still balances! Both sides doubled, but entry duplicated.
Completely Omitted Transaction
Trial balance still balances! Neither debit nor credit recorded.
Both Sides Wrong (Same Amount)
Trial balance still balances! Debits = Credits, but amounts wrong.
Why Trial Balance Still Matters
Even though it can't catch everything, a trial balance is essential:
Catches mechanical errors
Unbalanced debits/credits
Quick and easy
One simple check: do totals match?
Catches most posting errors
Reversals, transpositions, omissions
Required by standards
Part of the official cycle
First verification step
Before relying on financial statements
Modern Software & Trial Balance
Most Accounting Software Generates Trial Balances Automatically
What it does:
- Lists all accounts with current balances
- Calculates totals automatically
- Displays results immediately
What it doesn't do:
- Find errors (that's your job)
- Tell you which account is wrong
- Catch logical errors
Key Takeaway
A trial balance is a mechanical verification that total debits equal total credits in the general ledger. It catches posting errors and mathematical mistakes, making it an essential quality-control step. However, it cannot catch all errors—incorrect accounts, duplicates, or omissions that balance both sides. It's the first line of defense, not the last.
Test Your Understanding
What is the primary purpose of a trial balance?
You prepare a trial balance and find that debits total $50,000 but credits total $48,000. What does this tell you?
A trial balance shows all accounts balanced at the end of the period. Which of the following could STILL be wrong?
In what order do the three trial balances appear in the accounting cycle?
True or False: If a trial balance balances, you can be 100% confident that all transactions are recorded correctly.
Ready to Practice?
You now understand how to prepare a trial balance and what it can (and can't) catch. The Practice Lab is where you'll prepare them—record transactions, post to the ledger, prepare trial balances, and troubleshoot unbalanced ones.
Try the Practice Lab