What is a trial balance?
A trial balance lists every ledger account with its debit or credit balance, to check that total debits equal total credits before the accounts are prepared.
What a trial balance means
In double-entry bookkeeping, every transaction is recorded twice: once as a debit and once as a credit. A trial balance pulls the closing balance of every account in the general ledger into one list, with debits in one column and credits in the other. If the bookkeeping has been done correctly, the two columns total the same.
The trial balance is the starting point for the year-end accounts. Your accountant takes it, posts adjustments such as depreciation, accruals and prepayments, and then splits the balances into the profit and loss account and the balance sheet.
Example
A simplified trial balance for a small consultancy at its year end:
| Account | Debit | Credit |
|---|---|---|
| Bank | £21,500 | |
| Trade debtors | £8,000 | |
| Computer equipment | £3,500 | |
| Sales | £96,000 | |
| Salaries | £38,000 | |
| Rent and overheads | £14,000 | |
| Dividends paid | £30,000 | |
| VAT owed to HMRC | £4,800 | |
| Trade creditors | £2,200 | |
| Share capital | £100 | |
| Retained earnings brought forward | £11,900 | |
| Total | £115,000 | £115,000 |
The columns agree at £115,000, so the bookkeeping is arithmetically consistent.
Why it matters for your business
A trial balance that does not balance tells you something has gone wrong: a one-sided entry, a typing error or a balance left in a suspense account. Modern software such as Xero and QuickBooks enforces double entry, so the trial balance almost always balances. That does not mean it is correct.
What a trial balance will not catch
An entry posted to the wrong account, a transaction missed completely, or a duplicate of both sides still leaves the columns equal. That is why bookkeepers also carry out bank reconciliations, check supplier and customer balances and review each account for anything that looks out of place. A clean, reviewed trial balance makes year-end accounts quicker and cheaper.
A useful habit is to run the trial balance at each month end and look down it for anything odd: a negative bank balance that should be positive, a large balance in a suspense or "uncategorised" account, or VAT and PAYE liabilities that never seem to clear. These are often the first signs of coding errors, missing transactions or payments to HMRC that have not been recorded. Fixing them monthly is far quicker than unpicking a whole year at once.
Common questions
Both include it as a standard report. In Xero it is under Accounting, Reports, Trial Balance. In QuickBooks Online search for Trial Balance in Reports. You can run it for any date, which is useful for month-end checks.
No. A trial balance lists every account, including income and expenses, simply to check debits equal credits. A balance sheet is a formatted statement showing only assets, liabilities and equity at a date, after year-end adjustments.
More accounts & bookkeeping terms
- Accounting equation
- Accounts payable
- Accounts receivable
- Accrual accounting
- Accruals
- Amortisation
- Assets
- Bad debt