Trial Balance
What is a Trial Balance?
Originally, the trial balance was used as a checking tool.
![tb1](https://seeaccountingnow.online/wp-content/uploads/2020/05/tb1.jpg)
How it Works
In the days of manual accounting systems, it was easy to make mistakes while recording transactions.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb2.jpg)
To check for errors, accounts clerks used a two-step process.
![tb3](https://seeaccountingnow.online/wp-content/uploads/2020/05/tb3.jpg)
Step 1—Check Control Accounts
First up, they checked the control accounts.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb4.jpg)
They did this by checking the control accounts against the records of other businesses.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb5.jpg)
For example, the checking control account will contain a record of every transaction made with the bank.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb6.jpg)
In its month-end statement, the bank will also show a record of every transaction made with the bank.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb7.jpg)
So, to check the control account, they checked its transactions against those shown on the bank statement.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb8.jpg)
If the records agreed, it showed the control account was correct.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb9.jpg)
Theoretically, if the control account was correct, the other accounts should have been correct, as well.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb10.jpg)
The reason for this was because of the double – entry system.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb11.jpg)
With the double-entry system, you recorded each transaction with a double entry.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb12.jpg)
One entry showed where the money or value came from.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb13.jpg)
The other shows where that money or value was used—or where it went.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb14.jpg)
Accounting theory dictates that for every debit there should be a corresponding credit.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb15.jpg)
So if the transaction shown in the control account is correct, the duplicate transaction should be correct, as well.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb16.jpg)
The problem was it was easy to make a mistake while recording the other side of a transaction.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb17.jpg)
So, while the transaction shown in the control account was correct.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb18.jpg)
The supposed duplicate copy was incorrect.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb19.jpg)
To quickly check for such errors, accounts staff used the second step of the two part checking process; the preparation of a trial balance.
![tb1](https://seeaccountingnow.online/wp-content/uploads/2020/05/tb1.jpg)
Step 2—Preparing a Trial Balance
All the accounts in your accounting system form what is known as the general ledger.
![tb21](https://seeaccountingnow.online/wp-content/uploads/2021/06/tb21.jpg)
Each account in the general ledger has a balance.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb22.jpg)
Some accounts will have a credit balance.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb23.jpg)
Others have a debit balance.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb24.jpg)
The underlying principle of the double-entry system is that for every debit, there should be a corresponding credit.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/tb25.jpg)
If this is the case, the trial balance will balance.
![tb20](https://seeaccountingnow.online/wp-content/uploads/2021/06/tb20.jpg)
However, if the records contained an error or errors, total debits would not equal total credits.
![tb27](https://seeaccountingnow.online/wp-content/uploads/2021/06/tb27.jpg)
To prepare a trial balance, clerks began by finding the balance of each account in the general ledger.
![tb35](https://seeaccountingnow.online/wp-content/uploads/2021/07/tb35.jpg)
Then they listed these balances in trial balance, in either the debit column or the credit column.
![tb36](https://seeaccountingnow.online/wp-content/uploads/2021/07/tb36.jpg)
Finally, they tallied the columns to determine if they were equal or not.
![tb37](https://seeaccountingnow.online/wp-content/uploads/2021/07/tb37.jpg)
© R.J (Bob) Hickman 2020