Totals method

The Totals Method of Preparing a Trial Balance

The totals method is one way to prepare a trial balance. Instead of extracting the closing balance of each ledger account, you take the total of all debit entries and the total of all credit entries that appear in each ledger account during the period.

For every ledger account, you add up the entire debit side and the entire credit side separately. These two totals — not the net balance — are then entered into the trial balance. The debit total of the account goes into the debit column of the trial balance, and the credit total goes into the credit column.

Because every transaction is recorded under the double entry system — one debit and one credit of equal amount — the grand total of all debit entries across all accounts must equal the grand total of all credit entries. If they do not match, an error has occurred somewhere in the posting or totalling process.

Why the Totals Method Is Not Widely Used

Despite being logically sound, this method is rarely used in practice. The reason is straightforward: the totals of debit and credit entries do not directly give you the balances of individual accounts. To prepare financial statements — the Trading and Profit & Loss Account and the Balance Sheet — you need the closing balance of each account, not the sum of all entries on each side.

For instance, knowing that the total debits in the Sales account are ₹0 and total credits are ₹1,00,000 tells you the total sales for the period. But for an account like Cash, you need the net balance (debit total minus credit total) to know how much cash the business actually has at the end of the period. The totals method does not provide this directly — you would have to compute each balance separately after preparing the trial balance, defeating the purpose of having a trial balance in the first place.