Trial balance does not balance: how to find the error

A trial balance lists every account balance in a debit column and a credit column. The two totals should be the same. When they are not, the difference is the bigger total less the smaller one.

Only some errors cause a difference. Each one puts more on one side of the books than the other.

• Only one side of an entry was posted
• Both sides were posted as debits, or both as credits
• The two sides were posted with different amounts
• An account or a column was added up wrongly
• A balance was left off the trial balance, copied onto it wrongly, or put in the wrong column

The size of the difference is the first clue.

A clue is not proof. It says where to look first.

Start with the trial balance itself, then the ledger accounts, then the single entries. Each stage has more to read than the one before, so the order saves work.

1. Work out the difference and write it down. Write down half of it too.
2. Add up both columns again. A slip in the adding is the quickest error to find and to put right.
3. Check that every balance is in the right column. Assets and expenses are debits. Liabilities, capital and income are credits. Look for a balance that is half the difference.
4. Check each figure on the list against the balance in the ledger. Look for a balance left off, and for a figure copied wrongly. If the difference divides exactly by 9, look for two digits swapped.
5. Check the balancing of each ledger account. Add up both sides again and work out the balance again.
6. Go back to the entries for the period. An amount equal to the difference points to an entry with one side missing. An amount equal to half of it points to an entry with both sides on the same side.
7. Correct each error you find, then add up the trial balance again. Stop only when the two totals agree.

If the errors cannot be found at once, the difference is put in a suspense account so that work can carry on. It is a temporary account, and it must be cleared to nil before the final accounts are prepared.

Marchmont Tailoring lists its balances at 31 March. The two columns do not agree.

The debit column adds up to £12,275.00 and the credit column to £12,905.00. The difference is £630.00, and half of it is £315.00.

Adding both columns again gives the same totals, so the adding is right. Every balance is in the right column, and no balance is £315.00.

No account in the ledger has a balance of £630.00, so nothing was left off. But £630.00 divided by 9 is exactly 70, which points to two digits swapped.

Checking each figure against the ledger finds it. The Wages account has a balance of £2,815.00. It was copied onto the list as £2,185.00.

With Wages corrected, the debit column adds up to £12,905.00. That is the same as the credit column, so the trial balance agrees.

Finding the difference does not finish the job. Six kinds of error leave total debits equal to total credits, so an agreed trial balance can still be wrong.

Omission

A transaction left out completely. There is no debit and no credit.

Commission

The right amount on the right side, in the wrong account of the same kind.

Principle

An entry in the wrong kind of account, such as an asset recorded as an expense.

Original entry

A wrong figure written where the transaction was first recorded, then posted to both sides.

Reversal of entries

The debit and the credit swapped.

Compensating errors

Two separate mistakes that cancel each other.

Other checks find these.

• A supplier's statement shows an invoice that was never entered.
• A customer pays an invoice that is not in the books.
• A gap in the invoice numbers shows that one never reached the books.

A bank reconciliation and a control account reconciliation help too. Each one compares the books with a second record of the same thing.

• Going straight into the ledger. Add up the list again first, and check the columns.
• Changing a figure to make the totals agree. The error is still in the books, and now it is hidden.
• Stopping at the first error. There can be more than one, so add up again after every correction.
• Taking a clue as proof. A difference that divides by 9 points to swapped digits, but the figure still has to be found.
• Leaving a suspense account in the books. A balance left on it means the books still hold errors.
• Believing that an agreed trial balance is a correct one. It proves only that the debits equal the credits.

• The two totals are the same figure, to the penny.
• Every correction can be traced to the ledger account or the document that shows the right figure.
• Each figure on the list is the same as the balance in the ledger.
• If a suspense account was opened, its balance is nil.

Keep a note of each error and how it was put right. A correction made in the ledger goes through the journal, with a short note that says what it is for.