Detection and Rectification of Errors in Trial Balance

It’s important to note, however, that although performing trial balance accounting can highlight simple mathematical errors, it won’t reveal every problem in your books. Missing transactions or classification errors can occur even when recording the trial balance. The trial balance is also not an official financial statement and is only used internally. If the two numbers match, you have a balanced trial balance.

Furthermore, a trial balance forms the basis for the preparation of the main financial statements, the balance sheet and the profit and loss account. The trial balance lists every open general ledger account by account number and provides separate debit and credit columns for entering account balances. The Greener Landscape Group’s trial balance for April 30,20X2 appears below. The general ledger is used to record all of your company’s transactions. To get started with recording the trial balance, you must first complete these ledger accounts. You can sum up the transactions using a trial balance format, making separate columns for debits and credits.

The Eight Steps of the Accounting Cycle

So, what we have learned about trial balance example from the above examples. As per the transactions shown above, now we will prepare the Trial Balance for NSBHandicraft as of March 31st, 2019. In the next video, we’ll learn how to read the balance sheet. Tara Kimball is a former accounting professional with more than 10 years of experience in corporate finance and small business accounting. She has also worked in desktop support and network management. Investopedia requires writers to use primary sources to support their work.

So, once the errors are allocated, then corrections could be done to remove the errors. The balance sheet trial balance lists all the assets, liabilities, and equity accounts in the company’s balance sheet. The balance sheet trial balance is used to ensure that the balances in the balance sheet are correct.

Close the Books

If your debits and credits are unequal, you must find ways to balance the accounts. You could have unequal debits and credits as a result of incorrectly posting accounting entries, forgetting to record an account, or miscalculating. Ledger AccountLedger in accounting records and processes a firm’s financial data, taken from journal entries. This becomes an important financial record for future reference. Ledger in accounting records and processes a firm’s financial data, taken from journal entries. As per the definition of the trial balance, it is the first step in the preparation of the accounts of the statement of any firm.