Trial Balance: Meaning, Format & Example
Definition
A trial balance is a list of every ledger account with its debit or credit balance on a date. If the books follow double entry, total debits equal total credits.
| Term | Trial balance |
|---|---|
| In Hindi | तलपट (ट्रायल बैलेंस) |
| Area | Accounting |
| Search phrase | trial balance |
| Try it | Journal entries |
तलपट (ट्रायल बैलेंस) — हिंदी में अर्थ
ट्रायल बैलेंस किसी तारीख पर सभी खातों के डेबिट या क्रेडिट शेष की सूची है। सही खाते रखने पर कुल डेबिट और कुल क्रेडिट बराबर होते हैं।
Trial balance format
S. No. | Name of account | L.F. | Debit balance ₹ | Credit balance ₹ — totalled at the foot. Assets and expenses usually have debit balances; liabilities, capital and income have credit balances.
What it catches and what it does not
A trial balance that does not agree shows an arithmetic or posting error — a one-sided entry or a wrong total. It does not catch errors of omission (a transaction never recorded), errors of principle (an asset booked as an expense) or compensating errors.
Example
Capital ₹10,00,000 Cr; Machinery ₹6,00,000 Dr; Stock ₹2,50,000 Dr; Creditors ₹1,50,000 Cr; Bank ₹3,00,000 Dr — totals ₹11,50,000 on each side.
Related tools and guides
Frequently asked questions
What is a trial balance?
A statement listing all ledger balances on a date to check that total debits equal total credits.
Is a trial balance a final account?
No. It is a working statement used to prepare the profit and loss account and balance sheet.
Can a trial balance agree and still be wrong?
Yes — omissions, errors of principle and compensating errors do not affect the totals.
Does ERP prepare the trial balance?
Yes. Because every entry is posted with equal debits and credits, the trial balance is always available from the ledgers.
Related terms
- Accounts receivableAccounts receivable is the money customers owe a business for goods or services already supplied on credit. It is shown as trade receivables (debtors) under current assets.
- Accrual vs cash basis of accountingUnder the accrual (mercantile) basis, income and expenses are recorded when they are earned or incurred, whatever the payment date. Under the cash basis, they are recorded only when cash is actually received or paid.
- Balance sheetA balance sheet is a statement of what a business owns (assets) and what it owes (liabilities and owners' equity) on a particular date. Total assets always equal total equity plus liabilities.
- Cash conversion cycleThe cash conversion cycle (CCC) is the number of days between paying for raw material and collecting cash from the customer for the finished goods: days inventory outstanding plus days sales outstanding minus days payables outstanding.
- Contra entryA contra entry is a transaction between cash and bank accounts of the same business — such as cash deposited into the bank or cash withdrawn for office use — where both the debit and the credit side are cash or bank.
- Contribution marginContribution margin is selling price minus variable cost. It is the amount each sale contributes first towards fixed costs and then to profit; as a percentage of sales it is called the contribution margin ratio or P/V ratio.