What is a Trial Balance which is:

• a list of debit and credit balances extracted from the accounts in the ledger at a particular date

Understand the Purpose of a Trial Balance which is:

• The Trial Balance is prepared for the purpose of checking the arithmetical accuracy of the entries made in the ledger.
• The Trial Balance enable the counter check of the equality of debits and credits after posting ie.

Sum of debits account balance = Sum of the credit accounts balance in the Trial Balance and if not equal, errors in journalizing and posting.

Steps involve:

• List the account titles and their balances
• Total the debit and credit columns
• Prove the equality of the two columns

Note that a Trial Balance follows the Double Entry or Dual Aspect Concept:

• The total debit balances will be equal to the total credit balances in the Trial Balance if the double-entry principles of recording have been strictly adhered to.

Other salient points:

• An account has a debit balance when its debit total exceeds its credit total
• An account has a credit balance when its credit total exceeds its debit total
• Assets, expenses and drawings accounts have debit balances
• Liability, capital and revenue accounts have credit balances.
• Purchases, Sales Returns have debit balances
• Sales, Purchases Returns have credit balances
• Personal accounts record transactions with persons who have dealng with the business for example debtors and creditors accounts
• Errors that affect the agreement of the trial balance totals are wrong calculation of balances, omission of either a debit or credit entry of a transaction, entry on the wrong side of an account and errors in amount.
• Errors that do not affect the agreement of the trial balance totals are complete omission of entries of a transaction errors of commission, errors in principle, compensating errors, complete reversal of entries and errors in original entry.

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