Preparing a Trial Balance: Checking That Debits Equal Credits

What a Trial Balance Is (and Why You Prepare One)

A trial balance is a list of all ledger accounts and their ending balances, arranged in two columns: debits and credits. Its primary purpose is to confirm that, after posting, the total of debit balances equals the total of credit balances. This is a practical checkpoint before you move on to adjustments and financial statements.

A trial balance can tell you:

• Whether your ledger is in balance mathematically (total debits equal total credits).
• Whether an account has an unexpected debit or credit balance (a “sign” issue you can investigate).
• Whether you may have missed posting something (if an account you expected to see is absent).

A trial balance cannot tell you:

• Whether you posted to the correct accounts (e.g., Supplies Expense posted to Rent Expense can still balance).
• Whether you posted the correct amount to both sides (e.g., you recorded $900 instead of $90 on both debit and credit).
• Whether you omitted an entire transaction (nothing posted means nothing to unbalance).
• Whether you duplicated a transaction (posting twice can still balance).

How to Compile a Trial Balance from Ledger Balances

Step 1: Choose the “as of” date

Pick the cutoff date for the trial balance (for example, month-end). Your trial balance is a snapshot: Trial Balance as of March 31.

Step 2: Pull the ending balance from each ledger account

For each account in your general ledger, identify the ending balance as of the trial balance date. Use the balance shown after the last posted entry up to that date.

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• If the account’s normal balance is debit (assets, expenses), it will usually end as a debit balance.
• If the account’s normal balance is credit (liabilities, equity, revenue), it will usually end as a credit balance.

Important: some accounts can legitimately carry the opposite sign (for example, a bank overdraft can create a credit balance in Cash). The trial balance is where those exceptions become visible.

Step 3: List each account once, with its balance in the correct column

Create a two-column list. Each account appears on one line with its ending balance placed in either the debit or credit column (not both). If an account has a zero balance, many bookkeepers omit it to keep the list clean (unless policy requires showing all accounts).

Step 4: Add the debit column and the credit column

Total each column carefully. If the totals match, the trial balance “balances.” If they do not match, you troubleshoot before proceeding.

Step 5: Verify the totals match exactly

The control check is simple:

Total Debits = Total Credits

If they match, you have evidence that postings are arithmetically consistent. If they do not, you have a posting, sign, omission, or arithmetic issue to find and fix.

Worked Example (Running Scenario): Green Thumb Gardening Services

Assume Green Thumb Gardening Services is preparing a trial balance as of March 31. You pull the ending balances from the ledger accounts used so far in the scenario (cash activity, customer invoices and payments, vendor bills and payments, supplies, equipment, and payroll-related entries already recorded).

Ledger ending balances (pulled from the ledger)

From the ledger, you identify these ending balances as of March 31:

• Cash: $9,120 (debit)
• Accounts Receivable: $1,450 (debit)
• Supplies: $380 (debit)
• Equipment: $6,000 (debit)
• Accounts Payable: $920 (credit)
• Wages Payable: $0 (zero; omitted here)
• Owner, Capital: $12,000 (credit)
• Service Revenue: $8,300 (credit)
• Supplies Expense: $610 (debit)
• Rent Expense: $1,200 (debit)
• Wages Expense: $2,160 (debit)
• Utilities Expense: $300 (debit)
• Owner, Draw: $1,000 (debit)

Trial Balance as of March 31

The totals do not match: debits exceed credits by $1,000. That means you do not move forward yet; you troubleshoot.

Troubleshooting When the Trial Balance Does Not Balance

When totals do not match, work systematically. The goal is to find the cause quickly without “randomly changing” balances.

1) Recheck posting from journal to ledger (completeness and accuracy)

Common posting problems include:

• A journal line posted to the wrong ledger account.
• A journal line posted for the wrong amount (e.g., transposed digits).
• Only one side of a journal entry posted (debit posted but credit not posted, or vice versa).

Practical method: pick a time window (e.g., the last week of the month) and trace each journal entry to the ledger accounts it should affect. Confirm each debit and credit line is present and matches the journal.

2) Confirm the sign: debit-balance accounts vs. credit-balance accounts

A very common trial balance issue is placing a balance in the wrong column. For each account with an unexpected sign, confirm the ledger’s ending balance direction.

In the example above, the difference is exactly $1,000, which is a clue. Look at the trial balance: Owner, Draw is listed as a debit of $1,000. If someone mistakenly placed it as a credit, the trial balance would be off by $2,000 (because moving a number from one column to the other changes the difference by double the amount). Since the difference is $1,000, the issue is more likely a missing $1,000 credit (or an extra $1,000 debit) rather than a simple column swap.

3) Look for missing entries or missing accounts

Missing items can happen in two ways:

• Missing a posted line: one side of an entry never made it to the ledger.
• Missing an account on the trial balance: the ledger balance exists, but you forgot to include it in the trial balance list.

Practical method: compare your trial balance account list to your chart of accounts or to a prior month’s trial balance. If an account is absent that normally appears (for example, a liability or an expense you know you used), investigate.

In Green Thumb’s example, the difference is $1,000. Suppose you discover that Owner, Capital should be $13,000 credit (because the owner made an additional $1,000 investment that was posted to Cash but the credit to Capital was never posted, or the Capital balance was copied incorrectly). If Owner, Capital is corrected from $12,000 to $13,000, the totals become:

• Total Debits: $22,220
• Total Credits: $22,220

Now the trial balance balances.

4) Verify arithmetic (ledger balances and trial balance totals)

Arithmetic errors can occur in two places:

• Within a ledger account: the running balance was calculated incorrectly.
• Within the trial balance: you added the columns incorrectly or copied a number incorrectly.

Practical method:

• Re-add each ledger account’s running balance (or re-run the report if using software).
• Re-add the debit and credit columns independently (use a calculator and then recheck by grouping accounts into smaller subtotals).
• Scan for transpositions (e.g., 1,620 vs. 1,260) and dropped digits (e.g., 920 copied as 92).

What a Balanced Trial Balance Does (and Does Not) Prove

What it proves

• For the accounts included, the ledger is arithmetically consistent: total debits equal total credits.
• Many common posting mistakes (like posting only one side of an entry) are likely to be detected.

What it does not prove

A balanced trial balance is necessary but not sufficient for accurate books. You can still have errors such as:

• Wrong account classification: posting a repair to Equipment instead of Repairs Expense can still balance.
• Equal but wrong amounts: recording $1,500 instead of $150 on both sides balances.
• Omitted transactions: if nothing is recorded, nothing is out of balance.
• Duplicate transactions: recording the same bill twice can still balance.

Use the trial balance as a key control point: it helps you confirm that the ledger “adds up,” and it highlights where to investigate before you proceed to the next stage of the accounting cycle.