Bookkeeping Basics
Trial Balance
A report listing every general ledger account with its debit or credit balance, proving total debits equal total credits.
A trial balance is a snapshot of all accounts in the general ledger with their current balances, split into two columns: debits and credits. If the two columns sum to the same number, the books are internally balanced — every entry since inception has kept the double-entry equation intact. It's run before preparing financial statements, typically as the first output of the close.
A balanced trial balance proves arithmetic consistency, nothing more. It cannot catch a transaction recorded to the wrong account, a missing invoice, or a duplicated entry — those keep debits and credits equal while making the numbers wrong. That's why the trial balance is the starting point of close rather than the finish: from it, you make adjusting entries, re-run it, and then derive the income statement, balance sheet, and cash flow statement.
Example
At month-end: cash $84,200 (debit), AR $47,000 (debit), equipment $120,000 (debit), AP $31,500 (credit), deferred revenue $18,000 (credit), equity and retained earnings (credit), revenue (credit), expenses (debit). The debit column totals $412,300. The credit column must also total $412,300 — if it doesn't, an entry is wrong or missing.
Common questions
What if my trial balance doesn't balance?
An entry has a posting error: a debit entered at the wrong amount, a credit posted to the wrong account, a transaction recorded one-sided, or a simple data-entry slip. Divide the difference by nine (transposition errors often divide evenly) or by two (single-side errors) to localize it fast.
Is a trial balance the same as a balance sheet?
No. The trial balance is a raw listing of every account including income statement accounts, used to verify debits equal credits. The balance sheet is a financial statement showing only assets, liabilities, and equity at a point in time, presented in proper format.
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