What Is a Trial Balance in Accounting?
Published May 20th, 2026 | Gimbla Contributor
A trial balance is a list of account balances from the general ledger, arranged as debits and credits. Its main purpose is to check whether total debits equal total credits before reports such as the Profit and Loss and balance sheet are prepared.
For small businesses, the trial balance is usually an accountant or bookkeeper’s review report. You may not read it every week, but it sits underneath the financial statements you rely on.
A trial balance is a mathematical check, not a complete proof. It can show that debits and credits balance, but it cannot prove every transaction is correct.
Quick answer
A trial balance lists all ledger accounts and their debit or credit balances. If the total debit column equals the total credit column, the ledger is mathematically balanced. If it does not, the books contain an entry or posting problem that needs investigation.
If the chart of accounts is the structure of the books, the trial balance is the checkpoint that shows the balances inside that structure.
Key points
- A trial balance comes from the general ledger.
- Total debits should equal total credits.
- It helps find posting and arithmetic errors.
- It does not catch every accounting mistake.
- An adjusted trial balance is often used before final reports.
What a trial balance includes
| Account type | Normal balance | Examples |
|---|---|---|
| Assets | Debit | Bank, accounts receivable, equipment |
| Liabilities | Credit | Accounts payable, GST payable, loans |
| Equity | Credit | Owner capital, retained earnings |
| Income | Credit | Sales, service income, interest income |
| Expenses | Debit | Rent, wages, subscriptions, cost of goods sold |
The report totals the debit and credit balances. In double-entry bookkeeping, every transaction affects at least two accounts, so the totals should match.
How a trial balance is prepared
The process is simple in principle:
- Record transactions in the accounting system.
- Post them to the general ledger.
- List each ledger account and its ending balance.
- Put each balance in the debit or credit column.
- Total both columns.
- Investigate any difference.
- Make adjustments if needed.
- Use the adjusted balances to prepare financial statements.
Modern accounting software handles much of this automatically, but the logic still matters. If a report looks wrong, you need to know whether the issue is a missing transaction, wrong account, wrong tax code or wrong side of the ledger.
Example trial balance
| Account | Debit | Credit |
|---|---|---|
| Cash at bank | $8,500 | |
| Accounts receivable | $3,200 | |
| Equipment | $5,000 | |
| Accounts payable | $2,100 | |
| GST payable | $900 | |
| Owner capital | $6,000 | |
| Sales income | $12,000 | |
| Rent expense | $1,800 | |
| Software expense | $500 | |
| Cost of goods sold | $2,000 | |
| Total | $21,000 | $21,000 |
This report balances, but it still needs review. For example, an expense might be in the wrong category or a bank transaction might be missing.
What errors can a trial balance find?
A trial balance can help identify:
- debits and credits that do not match
- one-sided entries
- posting to the wrong side of an account
- arithmetic or import errors
- duplicated journals that create unexpected balances
- suspense account balances that need investigation
What errors can it miss?
A balanced trial balance can still hide problems, including:
- a transaction left out completely
- the wrong account used on both sides
- a private expense coded as business
- incorrect GST treatment
- wrong customer or supplier allocation
- an invoice entered in the wrong period
That is why trial balance review should sit beside bank reconciliation, accounts receivable review, accounts payable review and tax code checks.
Trial balance vs financial statements
| Report | Purpose | Main reader |
|---|---|---|
| Trial balance | Checks ledger balances and supports adjustments | Accountant or bookkeeper |
| Profit and Loss | Shows income, expenses and profit over a period | Owner, adviser, lender |
| Balance sheet | Shows assets, liabilities and equity at a point in time | Owner, adviser, lender |
| Cash flow statement | Shows cash movements over a period | Owner, adviser, lender |
The trial balance is not usually the report you send to a lender or investor. It is the working report that helps make the financial statements reliable.
Frequently asked questions
What is a trial balance?
A trial balance is a list of general ledger account balances used to check whether total debits equal total credits.
Does a balanced trial balance prove the books are correct?
No. It shows the ledger balances mathematically, but it may not catch missing transactions, wrong accounts or incorrect treatment.
When is a trial balance prepared?
It is usually prepared at month end, year end, before tax work or before financial statements are finalised.
What is the difference between a trial balance and a balance sheet?
A trial balance is an internal checking report. A balance sheet is a financial statement showing assets, liabilities and equity.
Conclusion
The trial balance is one of the quiet controls behind good bookkeeping. It checks whether the ledger balances, then gives accountants and bookkeepers a place to review adjustments before reports are finalised.
For business owners, the main takeaway is simple: if the trial balance is messy, the reports built from it will be harder to trust.