1. Nature and Purpose of an Unadjusted Trial Balance
A Trial Balance is a working document prepared at the end of an accounting period. It lists every account in the General Ledger along with its debit or credit balance.
Its primary purpose is to test the mathematical accuracy of the double-entry system. If entries were recorded correctly, total debits must equal total credits.
                           Alpha Trading Company
                    Trial Balance as of June 30, 2026
=============================================================================
Account Title                                      Debit ($)       Credit ($)
-----------------------------------------------------------------------------
Cash and Cash Equivalents                             24,500
Accounts Receivable Control                           11,200
Inventory                                              8,000
Accounts Payable Control                                               6,400
Share Capital                                                         30,000
Retained Earnings                                                      5,000
Sales Revenue                                                         18,500
Salaries Expense                                      12,400
Utility Expense                                        3,800
-----------------------------------------------------------------------------
TOTALS                                                59,900           59,900
=============================================================================

2. Errors that Unbalance a Trial Balance
If the debit column does not equal the credit column, it means a mathematical or posting error occurred, such as:
  • Transposition Errors: Accidentally swapping two digits (e.g., writing $5,420 as $5,240). Tip: The difference between the wrong and right numbers will always be divisible by 9.
  • Omission of a Single Leg: Posting a debit entry to an account but forgetting to enter the matching credit.
  • Slide Errors: Misplacing a decimal point (e.g., entering $1,000 as $100).
  • Double Posting on One Side: Accidentally debiting two different accounts for the same transaction instead of debiting one and crediting the other.

3. Errors that Keep the Trial Balance in Balance
A trial balance can balance perfectly even if it contains major errors. The trial balance only proves that total debits equal total credits, not that individual records are correct. Errors that do not throw off the balance include:
  • Errors of Omission: Entirely forgetting to record a transaction, so no debit or credit is made at all.
  • Errors of Commission: Posting an entry to the correct side (debit or credit) and the right account category, but under the wrong person’s name (e.g., debiting Customer X instead of Customer Y).
  • Errors of Principle: Posting an entry to the correct side but using the wrong account category, which violates accounting principles (e.g., debiting Repair Expense instead of a Machinery Asset account).
  • Compensating Errors: Two or more separate mistakes that accidentally cancel each other out (e.g., understating a debit by $100 and understating a credit elsewhere by $100).

 
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