Accountancy · Ch 6 — Trial Balance and Rectification of Errors
To Ascertain the Arithmetical Accuracy of Ledger Accounts
To Ascertain the Arithmetical Accuracy of Ledger Accounts
The trial balance is not an end in itself — it is a tool. Its first and most obvious job is to check whether the ledger is arithmetically sound. After all the accounts have been posted and balanced, the trial balance lists every account along with its balance. If the total of all debit balances equals the total of all credit balances, we have reasonable assurance that every debit entry was matched by a corresponding credit entry and that the balancing of each account was done correctly.
This is the arithmetic-accuracy test. It catches errors like a wrong total in an account, a debit posted as a credit, or a balance carried forward incorrectly. When the two sides of the trial balance match, the bookkeeper can assume that the double-entry rule — for every debit there is an equal credit — has been followed in the ledger.
A tallying trial balance is not conclusive proof that the accounts are correct. It only confirms that the debits and credits are equal in total. Many errors — such as recording a transaction in the wrong account, omitting a transaction entirely, or compensating errors — do not disturb the equality of the trial balance. The trial balance can be perfectly balanced and the books still be wrong. …