{"id":271501,"date":"2023-12-06T12:49:17","date_gmt":"2023-12-06T00:49:17","guid":{"rendered":"https:\/\/www.reckon.com\/au\/?page_id=271501"},"modified":"2026-08-31T17:19:40","modified_gmt":"2026-08-31T05:19:40","slug":"trial-balance","status":"publish","type":"glo","link":"https:\/\/www.reckon.com\/au\/glossary\/trial-balance\/","title":{"rendered":"Trial balance"},"content":{"rendered":"

[et_pb_section fb_built=”1″ custom_padding_last_edited=”off|desktop” _builder_version=”4.27.2″ custom_margin=”0px||0px||false|false” custom_padding=”0px||0px||false|false” custom_padding_phone=”0px||||false|false” da_disable_devices=”off|off|off” locked=”off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row column_structure=”1_3,2_3″ _builder_version=”4.27.2″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” width=”100%” custom_margin=”0px||0px||false|false” custom_padding=”0px||0px||false|false” global_colors_info=”{}”][et_pb_column type=”1_3″ module_class=”table-contents” _builder_version=”4.23″ background_color=”#f3f2f6″ custom_padding=”25px||25px||true|false” sticky_position=”top” sticky_limit_bottom=”section” sticky_position_tablet=”top” sticky_position_phone=”none” sticky_position_last_edited=”on|desktop” border_radii=”on|24px|24px|24px|24px” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.23″ text_font=”||||||||” global_colors_info=”{}” background__hover_enabled=”on|desktop”][\/et_pb_text][\/et_pb_column][et_pb_column type=”2_3″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Definition description” _builder_version=”4.27.8″ header_2_font_size=”32px” hover_enabled=”0″ header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” global_colors_info=”{}” sticky_enabled=”0″]A trial balance is a worksheet that compiles the balances from all ledger accounts into a debit column and a credit column with equal totals. Think of it as a test of the double-entry accounting system, making sure your books are accurate for the accounting period<\/a>.<\/p>\n

How does a trial balance work?<\/h2>\n

A trial balance compiles all the balances from your company\u2019s ledger accounts for a reporting period, as well as captures all financial transactions and makes sure your total debits and credits balance.<\/p>\n

Trial balances are fundamental to double-entry bookkeeping because they serve as an exercise in catching any mathematical errors<\/a> in your accounting records.<\/p>\n

Bear in mind that a trial balance is an internal document, not a financial statement for use outside the organisation. It\u2019s a checkpoint to confirm the mathematical accuracy of your company\u2019s transactions before finalising official financial statements.<\/p>\n

Bottom line: the trial balance is a financial health check. Accountants use it as an internal audit tool to summarise all business accounts in the one place.<\/p>\n

What is included in a trial balance?<\/h2>\n

A trial balance lists several components. Your general ledger accounts \u2014 including nominal ledger accounts \u2014 appear in the far left column, each listed by account number.<\/p>\n

Accounts with debit balances, like accounts receivable, are listed in the debit column on the left. The debit column comes before the credit column, with total debits below.<\/p>\n

Accounts with credit balances, such as accounts payable, are listed in the credit column on the right. Your credit balances sit at the bottom, much like debit balances. Below all the accounts, you have the totals of the debit and credit balances.<\/p>\n

Trial balance format and example<\/h2>\n

Below is an example of a trial balance showing debit entries and credit entries in the standard trial balance format:<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Account name<\/th>\nDebit<\/th>\nCredit<\/th>\n<\/tr>\n
Cash<\/td>\n$15,500<\/td>\n<\/td>\n<\/tr>\n
Accounts receivable<\/td>\n$12,678<\/td>\n<\/td>\n<\/tr>\n
Equipment<\/td>\n$50,000<\/td>\n<\/td>\n<\/tr>\n
Accumulated depreciation<\/td>\n<\/td>\n$8,800<\/td>\n<\/tr>\n
Accounts payable<\/td>\n<\/td>\n$16,378<\/td>\n<\/tr>\n
Capital<\/td>\n<\/td>\n$35,000<\/td>\n<\/tr>\n
Service revenue<\/td>\n<\/td>\n$42,000<\/td>\n<\/tr>\n
Rent expense<\/td>\n$11,000<\/td>\n<\/td>\n<\/tr>\n
Salaries expense<\/td>\n$13,000<\/td>\n<\/td>\n<\/tr>\n
Total<\/td>\n$102,178<\/td>\n$102,178<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

How do you prepare a trial balance?<\/h2>\n

List all your general ledger account balances for the accounting period, then create two columns: one for debits and one for credits.<\/p>\n

Enter each account\u2019s final balance into the correct column. Assets and expenses go in the debit column. Liabilities, equity and revenue go in the credit column.<\/p>\n

Add up all the numbers in the debit column, then do the same for the credit column. Check that the two totals are equal. If total debits equal total credits, your books are balanced.<\/p>\n

What are the three types of trial balance?<\/h2>\n

There are three types of trial balance, each with a different purpose:<\/p>\n

1. Unadjusted trial balance<\/h3>\n

The unadjusted trial balance captures initial ledger data before any corrections are made. It is effective for a quick spot-check of day-to-day transactions, or as a starting point to analyse accounts.<\/p>\n

2. Adjusted trial balance<\/h3>\n

The adjusted trial balance is prepared after adjusting journal entries are made. It summarises the final balances in all accounts and is used to create accurate financial statements and financial reports.<\/p>\n

3. Post closing trial balance<\/h3>\n

The post closing trial balance is prepared after closing entries have been completed. It ensures accounts are ready for the next accounting period and acts as the starting trial balance for the next financial year.<\/p>\n

What errors can a trial balance detect?<\/h2>\n

If the total debits don\u2019t equal the total credits, an error has occurred in your journal entries. Some of the more common accounting errors a trial balance catches will include:<\/p>\n