Trial balance is a term used in accountancy and double-entry bookkeeping. This method of bookkeeping requires that every transaction has both a debit and a credit entry, and the trial balance is one method of seeing if the two sides of the books 'balance'.

A trial balance is a list of balances at a certain point in time arranged according to whether they are debit balances or credit balances. An example of a simple trial balance is shown below:

  Trial Balance of XYZ & Co at 31.12.2001 
                   Dr      Cr
                   £       £
Sales                    10,000
Purchases        5,000
Heat and light     500
Accountancy        600
Rates              300
Bank             2,000
Motor Vehicles   2,000
Capital                     400
                10,400   10,400

It should be noted that because a trial balance balances does not mean that there are no errors in the acccounts. A transaction may have been omitted completely, for example, without affecting the balancing of the trial balance.

Some errors which might be revealed by a trial balance include errors in additions, using one figure for the debit entry and another figure for the credit entry, or entering only one side of a transaction.

A trial balance is a common tool for bookkeepers and accountants when preparing final accounts of a business, as it enables balances to be picked up easily for transferring to the balance sheet and profit and loss account. It also simplifies analysis and review of the account balances.

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Tri"al bal`ance. (Bookkeeping)

The testing of a ledger to discover whether the debits and credits balance, by finding whether the sum of the personal credits increased by the difference between the debit and credit sums in the merchandise and other impersonal accounts equals the sum of personal debits. The equality would not show that the items were all correctly posted.


© Webster 1913

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