A trial balance is a list of every ledger account’s closing balance on one date, set out in two columns, debit and credit. If every entry was posted correctly, the two columns add up to the same total. It is a quick arithmetic check on your books, not a proof that the books are right.
This guide gives you the standard trial balance format, a worked example you can copy by hand, the five steps to prepare one and the errors it cannot catch. It also shows how TallyPrime displays the trial balance format in two clicks. The figures in this trial balance format example are made up for practice.
What is a trial balance?
A trial balance is a statement, not an account. After you have recorded transactions in the journal and posted them to the ledger, each ledger ends with a balance on the debit side or the credit side. The trial balance collects all those balances on one sheet as on a date, usually the last day of the month or the financial year. If the total of the debit balances equals the total of the credit balances, the books are arithmetically in agreement. That is because every entry in double-entry bookkeeping has an equal debit and credit.
The NCERT Class 11 chapter on trial balance and rectification of errors and the ICAI Foundation study material on the accounting process both teach it this way. Accountants use it as the base for the profit and loss account and the balance sheet, which are prepared next.
What is the trial balance format?
The format has a heading and four columns. The heading names the business and the date: “Trial balance of [business name] as on [date]”. Under it, list the accounts with their balances.
| Column | What goes in it |
|---|---|
| S. No. | A running number for each ledger account |
| Name of account (particulars) | The ledger account, such as Cash, Sales, Rent |
| Debit balance (₹) | Accounts whose balance is on the debit side |
| Credit balance (₹) | Accounts whose balance is on the credit side |
The rule for placing each account is easy to remember if you know the golden rules of accounting, which our guide on the 3 golden rules of accounting explains. Assets, expenses, losses, drawings and purchases normally have debit balances. Capital, liabilities, income, gains and sales normally have credit balances.
| Normally a debit balance | Normally a credit balance |
|---|---|
| Cash, bank (when positive), debtors, stock, furniture, machinery | Capital, loans taken, creditors, bills payable |
| Purchases, sales returns, wages, salaries, rent, interest paid | Sales, purchase returns, interest received, commission received |
| Drawings | Reserves and provisions |
How do you prepare a trial balance step by step?
- Post every journal entry to the ledger. If you skip a posting, the trial balance will show it as a difference.
- Total each ledger and find its closing balance, debit or credit.
- List the accounts in the format above. Many accountants keep assets and liabilities together, then expenses and incomes, so the next statement is easy.
- Place each balance in the debit or credit column, according to its side. Do not mix the sides.
- Total both columns and compare them. If they match, you are ready for the final accounts. If not, look for the difference before you go on.
If you are still unsure how a transaction becomes a debit and a credit, practise with the solved cases in our journal entries questions with answers first.
Trial balance example with solutions
Here is a worked trial balance for a small trader, as on 31 March. The names and amounts are an illustration made for this guide, not a real business.
| S. No. | Account | Debit (₹) | Credit (₹) |
|---|---|---|---|
| 1 | Capital | 2,00,000 | |
| 2 | Drawings | 15,000 | |
| 3 | Opening stock | 40,000 | |
| 4 | Purchases | 3,20,000 | |
| 5 | Sales | 4,80,000 | |
| 6 | Purchase returns | 10,000 | |
| 7 | Sales returns | 20,000 | |
| 8 | Salaries | 60,000 | |
| 9 | Rent | 36,000 | |
| 10 | Furniture | 94,000 | |
| 11 | Cash in hand | 25,000 | |
| 12 | Bank account | 1,10,000 | |
| 13 | Sundry debtors | 90,000 | |
| 14 | Sundry creditors | 70,000 | |
| 15 | Bank loan | 50,000 | |
| Total | 8,10,000 | 8,10,000 |
Both columns total ₹8,10,000, so the trial balance agrees. Three points are worth noting. Opening stock appears here, but closing stock does not, because closing stock is found by counting at the year end and is entered later in the final accounts. Sales returns are a debit item and purchase returns a credit item. And the bank loan sits on the credit side because it is money you owe.
Now see what a trial balance can and cannot tell you. If the total of the credit side had come to ₹8,19,000 against ₹8,10,000 on the debit side, you would know that something was posted wrongly by ₹9,000. You would then check that figure first, and then half of it (₹4,500), because an amount posted to the wrong side creates a difference of double its value. That habit saves hours.
What errors does a trial balance not show?
A trial balance that tallies doesn’t prove the books are correct. Some mistakes leave both columns equal. The usual list, as taught in the NCERT and ICAI material, is below.
| Error | What happened | Does the trial balance catch it? |
|---|---|---|
| Error of omission | A whole transaction was never entered | No |
| Error of commission | Entered in the wrong account of the same type, such as the wrong debtor | No |
| Error of principle | An expense booked as an asset, or the reverse | No |
| Compensating errors | Two mistakes that cancel each other | No |
| Original entry wrong | The wrong amount was written in the journal, and posted correctly after that | No |
| One-sided posting | Debit posted, credit forgotten | Yes: the totals differ |
| Wrong total or wrong balance | Addition mistake in a ledger | Yes |
| Amount on the wrong side | A credit balance written in the debit column | Yes: the difference is twice the amount |
If the totals do not match and you cannot find the reason quickly, accountants put the difference in a suspense account so the trial balance agrees for now. They clear the account once the error is found. Treat this as a short-term tool, never a permanent home for the difference.
How do you see the trial balance in TallyPrime?
You don’t need to build the trial balance by hand in Tally, because it updates with every voucher. According to Tally’s help page, press Alt+G (Go To), type Trial Balance and press Enter, or go to Gateway of Tally, Display More Reports, then Trial Balance. The report opens group-wise. Press F5 to switch between group-wise and ledger-wise views, Alt+F5 for the detailed format and F12 to configure what is shown.
Building one by hand once is still worth it, because it shows you why Tally’s debit and credit columns agree. When you move on, the bank reconciliation statement with an example is the next check an accountant runs, this time between your books and the bank’s.
How we teach this at IPA
At IPA, the Institute of Professional Accountants at Laxmi Nagar, trial balances are taught as part of the accounting foundation of the 12-month ADFA diploma. Its first module covers business financial accounting and computerised accounting. Students then work on the same books in Tally Prime, where the Tally course records list ledger and voucher management and financial reports. The Tally course takes 1 month at the basic level and 2 months at the advanced level, with live online batches and weekend timings. Placement support is available, and a free demo class is available for every course.
More guides on accounting, GST, Tally and income tax are on the IPA blog.
Frequently asked questions
What is a trial balance in simple words?
It is a list of all ledger balances on one date, with debit balances in one column and credit balances in the other. If the two totals are equal, the books agree arithmetically.
What should you do if the trial balance does not tally?
Check the difference. Re-add the columns, look for a balance in the wrong column, and test half the difference. Then check one-sided postings. If you cannot find it in time, carry it to a suspense account and keep looking.
Is closing stock shown in the trial balance?
No. Closing stock is counted at the year end and brought in when you prepare the trading account, so the trial balance shows opening stock only.
What is the difference between a trial balance and a balance sheet?
A trial balance lists every ledger balance, including expenses and incomes, to check the books. A balance sheet shows only assets, liabilities and capital at a date, after the profit or loss is worked out.
Can a trial balance tally and still be wrong?
Yes. Errors of omission, commission, principle, a wrong original entry and compensating errors leave both columns equal.
How often should a trial balance be prepared?
Businesses usually prepare it every month, and always before the final accounts. In Tally you can open it at any time.