A trial balance is a summary of all ledger account balances at a specific date. It's the checkpoint between your journal entries and financial statements — if total debits equal total credits, your books are mathematically correct.
Total debits must equal total credits. If they don't, there's an error somewhere in your journal entries.
Shows every account and its current balance in one report — a snapshot of your entire business.
Financial statements (P&L, Balance Sheet) are directly built from the trial balance.
The trial balance test:
Sum of all Debits = Sum of all Credits
If they match → proceed to financial statements. If not → find and fix the error.
XYZ Consulting Pvt Ltd — Trial Balance as at 30 April 2025
| Code | Account Name | Type | Debit (₹) | Credit (₹) |
|---|---|---|---|---|
| 1000 | Cash in Hand | Asset | ₹45,000 | |
| 1010 | Bank Account — Current | Asset | ₹8,50,000 | |
| 1100 | Accounts Receivable | Asset | ₹2,35,000 | |
| 1200 | Inventory | Asset | ₹1,80,000 | |
| 1500 | Equipment | Asset | ₹3,00,000 | |
| 1510 | Accumulated Depreciation | Contra Asset | ₹60,000 | |
| 2000 | Accounts Payable | Liability | ₹1,45,000 | |
| 2200 | GST Payable | Liability | ₹72,000 | |
| 2100 | Short-Term Loan | Liability | ₹2,00,000 | |
| 3000 | Owner's Capital | Equity | ₹8,00,000 | |
| 3100 | Retained Earnings | Equity | ₹1,20,000 | |
| 4000 | Sales Revenue | Revenue | ₹6,50,000 | |
| 4100 | Service Revenue | Revenue | ₹1,25,000 | |
| 6100 | Salary & Wages | Expense | ₹2,40,000 | |
| 6000 | Rent Expense | Expense | ₹1,20,000 | |
| 6200 | Utilities | Expense | ₹36,000 | |
| 6600 | Marketing | Expense | ₹55,000 | |
| 6400 | Depreciation Expense | Expense | ₹60,000 | |
| 6300 | Office Supplies | Expense | ₹21,000 | |
| 6500 | Insurance | Expense | ₹30,000 | |
| TOTAL | ₹21,72,000 | ₹21,72,000 | ||
✓ Balanced! Total Debits (₹21,72,000) = Total Credits (₹21,72,000). The books are correct.
Single-sided entries (debit without credit)
Posting to wrong side (debit instead of credit)
Arithmetic errors in account totals
Missed postings from journal to ledger
Wrong account (posted to Office Supplies instead of Rent — both debits)
Completely omitted transactions (not recorded at all)
Duplicate entries (same transaction entered twice)
Compensating errors (two mistakes cancel each other out)
A trial balance lists ALL account balances — assets, liabilities, equity, revenue, and expenses.
If debits ≠ credits, there's a recording error. Find it before preparing financial statements.
The trial balance is a checkpoint, not a financial statement itself.
Accounting software generates the trial balance automatically — no manual adding required.
After the trial balance is verified, adjusting entries are made, then financial statements are prepared.