Trial Balance
BeginnerA trial balance is a list of all accounts in the general ledger with their debit or credit balances at a point in time, used to check that total debits equal total credits.
At the end of a period, accountants list every account and its balance in two columns, one for debits and one for credits. If the bookkeeping has been done correctly, the two columns add up to the same total.
For example, a small business might list cash of 12,000, equipment of 30,000 and expenses of 18,000 in the debit column, and a loan of 20,000, owner's capital of 15,000 and sales of 25,000 in the credit column. Both columns total 60,000, so the trial balance balances.
A trial balance that does not balance is a clear sign of an error, such as an entry posted only once or a figure typed incorrectly. Finding and fixing these errors is easier at this stage than after financial statements are prepared.
A balanced trial balance does not prove the books are correct, however. An amount recorded in the wrong account or a transaction left out entirely would still leave the totals equal. The trial balance is a first check, not a full audit.
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