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TRIAL BALANCE
What is it?
The Trial Balance lists the debit and credit balances of all the ledger
accounts at one point in time. The report is used to confirm that the total of
the debits equals the total of the credits.
If an accounting software package is used, the computer will print this
report. The software program will balance all the ledger accounts and then
show them with either a debit or credit balance. If you have a manual
system, you need to work out the balance of each account and then
manually write out a Trial Balance.
Note: if your organisation is small and has a manual bookkeeping system,
you may only use a Cash Book and not have ledger accounts or prepare a
Trial Balance.
Definitions
A transaction is an exchange, usually involving money, between the
organisation and another organisation or person.
The Cash Book is often used for all transactions by very small
organisations. The book is used to record all monies received and all
payments made by the organisation. It often uses columns to identify types
of receipts and payments and usually keeps a running total of the bank
balance in the right hand column of the book.
Example of a Trial Balance
Organisation Name
Trial Balance as at 30 June 2005
Account Names
Cash at Bank
Debit
Credit
1,000
Grants (State) Operating – recurrent
Wages
Motor Vehicle
5,000
3,000
20,000
Accounts payable
2,000
Retained Surplus
17,000
$24,000
$24,000
Governance and Accountability – Financial Management - Trial Balance Topic Guide
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Checking for errors
 If the total of the debits does not equal the total of the credits, you will need to retrace
and check the entries.
Purpose of Trial Balance
 Generally, the Trial Balance is used by the bookkeeper as a tool for checking the
recording in the ledger accounts. It is usually done before preparing the financial reports.
 It is not part of the financial reports usually presented to management.
What a manager/committee member needs to know about a Trial Balance
 The committee must check that the Trial Balance balances, i.e. that the debits equal the
credits.
 The Trial Balance is a summary of the balances of all ledger accounts and can be used to
check the balances of individual ledger accounts. However, this information is included in
the financial statements in a format much more relevant to managers.
Where the Trial Balance fits in
Transactions are posted to the General Ledger.
A Trial Balance is prepared by the Bookkeeper and used to check the
accuracy of the General Ledger before preparing financial statements.
Financial Statements are prepared.
Related documents
Bookkeeping and Chart of Accounts Topic Guide
Governance and Accountability – Financial Management - Trial Balance Topic Guide
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