Numerous transactions take place in business every day. They are first recorded in some books of original entry i.e., Journal Proper or one of its sub-divisions. Then they are posted to the appropriate accounts in the ledger. Each ledger account is balanced periodically so as to ascertain the net effect of various transactions posted therein. In the process, some accounts may get closed, while the others may show a debit or a credit balance. Based on these balances, the final accounts are prepared for ascertaining the profit or loss and the financial position of the business. The quality and reliability of the results obtained depend largely on the correctness of the entries made in various books of account. Hence, it is necessary to ascertain the accuracy of these entries before we proceed with the preparation of final accounts.

For this purpose, we prepare a statement called 'Trial Balance', which shows balances of all the ledger accounts. As we studied in Unit 6, the ruling of trial  balance is similar to that of journal. We write the name of each account in the particulars column. If the account shows a debit balance, its amount is entered in the debit balances column and if it shows a credit balance the amount is entered in the credit balances column. We know that the total of the debit balances column must tally with the total of the credit balances column, because for every debit there is a corresponding credit and vice versa.

When the two totals tally, it is considered as a preliminary proof of the arithmetical accuracy of entries in the books of accounts. It is an assurance that posting into ledger has been correctly done and that equality between debits and credits has been maintained throughout. If, however, the two totals do not tally it implies that there are errors in the books of account.

Trial Balance can thus be defined as a statement (or a schedule) listing, in separate columns, the debit and credit balances of all ledger accounts on a particular date. It indicates whether or not the books of account have been written in accordance with the rules of double entry and ensures, to a great extent, the arithmetical accuracy of accounting entries.

As mentioned earlier, when the Trial Balance does not tally it means that there are errors in the books of account. Let us now analyse the errors which usually affect the Trial Balance and lead to its disagreement.

1.Omission of posting in one account : You are aware that both the debit and credit aspects of a transaction have to be posted in the ledger accounts. If you post it to the debit of one account and forget its posting to the credit of the other concerned account, it is bound to affect the Trial Balance. For example, an amount of Rs. 200 received from Ali, correctly entered on the debit side of the cash book but is not posted to the credit side of Ali's Account. This error shall result in the lower credit and hence the Trial Balance will not tally.

2.Double posting in one account : If by mistake you post an entry two times to the debit or to the credit of an account it would result in extra debit or credit and as such cause disagreement in the Trial Balance. If, however, the whole entry is posted twice i.e., both the debit and the credit aspects are posted twice, it won't affect the Trial Balance. It is because both the debit and the credit sides will be equally affected.

3.Posting on the wrong side of an account : When an entry is posted on the wrong side of an account i.e., instead of debit side it is posted on the credit side, it would also cause disagreement in the Trial Balance. In such a situation, the difference will be for double the amount. For example, R.s. 300 received from Khan which is correctly entered on the debit side of the Cash Book, but while posting it to Khan's Account it is wrongly posted to the debit side instead of the credit side. This would mean that a debit of Rs. 600 (Rs. 300 in Cash Account and Rs. 300 in Khan's Account) has no corresponding credit. So, in the Trial Balance, the credit side will be lower by Rs. 600.

4.Posting wrong amount in an account : If you post an entry to the correct side of an account but commit an error in writing the amount, this would affect the Trial Balance. Suppose, in the above example you post the entry correctly on the credit side of Khan's Account but the amount is wrongly put as Rs. 200. It would cause a difference of Rs. 100. In the Trial Balance, the credit side will be lower by Rs. 100.

5.Wrong totalling of the subsidiary book : If any subsidiary book is overcast or  under-cast, it affects the concerned account in ledger. Suppose the correct total of Sales Journal is Rs. 5,600, but it is actually totalled as R.s. 5,300. You know that the total of Sales Journal is posted to the credit side of the Sales Account. So, the Sales Account will be short by R.s. 300, and the Trial Balance will not tally.

6.Omitting to post the total of a subsidiary book : If the total of a subsidiary book is not posted to the concerned account, it would affect the Trial Balance. Such mistake relates only to the account where posting was to be done and as such affects only one account. Take for example, the Sales Journal. If its total of Rs. 18,900 is not posted to the credit of Sales Account, the credit side on the Trial Balance will be lower by R.s. 18,900.

7.Wrong totalling or balancing of an account : When an account is wrongly totalled or wrongly balanced, this would affect the Trial Balance. Suppose the debit side of Shyam's Account is totalled as Rs. 1,300 instead of Rs. 1,100. It would lead to wrong balance in Shyam's Account. Consequently, the debit total in the Trial Balance will be higher by R.s. 200. Similarly, if the totalling is correctly done but a mistake is committed in balancing the account, it would also cause a difference in the Trial Balance.

8.Omission of an account from Trial Balance : You know that all accounts which show some balance must be included in the Trial Balance. If you forget to write the balance of any account in the Trial Balance, it will not tally. In practice cash book balances are often omitted from Trial Balance.

9.Writing the balance of an account on the wrong side of the Trial Balance : lf the balance of an account which is to be shown in the debit column of the Trial Balance is actually shown in the credit column, the Trial Balances will not tally. It will be affected by double The amount. You noticed such error in respect of many items in Illustration 3.

10.Wrong totalling of the Trial Balance : If a mistake is committed in totalling the amount columns of the Trial Balance itself, the Trial Balance will not tally. Thus, you learn about various errors which may cause differences in the Trial Balance. Note that these errors affect only one aspect (debit or credit). This upsets the debit-credit correspondence leading to the disagreement of the Trial Balance.