A trial balance proves one thing: that the debits posted equal the credits posted. That is a narrower claim than it looks.
It catches a one-sided posting, a debit posted as a credit, and an amount entered on one side and not the other. Each of those breaks the equality, and the difference itself is a clue. A difference divisible by nine points at a transposition, where 5,940 was written for 5,490. A difference divisible by two points at an amount posted to the wrong side, because the account moves twice the amount away from where it belongs.
It cannot catch an entry omitted altogether or recorded twice. It cannot catch an entry posted to the wrong account on the correct side. It cannot catch an entry recorded at the wrong amount in both halves. All four leave the columns equal. A trial balance that balances is evidence about arithmetic, not about whether the right events were recorded in the right places.
Finding the hidden errors takes something the ledger does not contain. The source documents are one route. A reconciliation to an outside record such as a bank statement is another. So is an analytical read of a balance against what the business actually did.
Put the concept to work
Understand this concept
- Name the recording errors that can occur between an event and a posted ledger balance, and describe what each one does to the accounts it touches.
Apply this concept
- Given a described error and the entry as recorded, write the correction that puts both affected accounts where they belong.
Analyze this concept
- Separate the recording errors a balanced trial balance rules out from the ones it can hide, and say what evidence beyond the trial balance would find each hidden one.
Learning resources
Choose a lesson, try an application, or inspect the sources behind this concept.
Build on these ideas
- General ledger — Apply
To apply this concept: Required. A correction is posted to the same accounts the error reached.
- Journal entry — Apply
To understand this concept: Required. An error is a departure from a correctly written entry.
- Posting — Apply
To understand this concept: Required. Some errors happen in the entry and some in the posting.
Show 3 more prerequisites
- Recording error — Apply
To analyze this concept: Required. Diagnosing an error follows from being able to correct one.
- Recording error — Understand
To apply this concept: Required. Correcting an error requires naming which error it is.
- Trial balance — Analyze
To analyze this concept: Required. The question is what the trial balance can and cannot prove.
Lessons
Worked examples and cases
Practice
Common mistaken ideas
Sources
Related concepts
Show 3 more related concepts
Use this idea next
- Recording error — Analyze
Required level here: apply. Required. Diagnosing an error follows from being able to correct one.
- Recording error — Apply
Required level here: understand. Required. Correcting an error requires naming which error it is.
Used in these readings
These chapters explain or apply this concept. The label states how the chapter uses it.