The trial balance and its limitations

Preparing a trial balance

List each balance in the debit column (assets, expenses, drawings, purchases, returns inwards, opening inventory) or credit column (capital, liabilities, revenue, returns outwards, income, allowances, accumulated depreciation).

Closing inventory is not usually in the trial balance: it is a year-end adjustment.

Trial balance at 31 March

Errors the trial balance does NOT reveal

Errors that DO stop it agreeing

• Single entry (only one side posted).
• Different amounts posted on each side, including a transposition on one side only (£360 posted as £630).
• Casting (addition) errors in one account.
• A balance put in the wrong column, or omitted from the trial balance.
• Two debits (or two credits) for one transaction.

If the totals disagree, the difference goes temporarily to a suspense account while the errors are found.

Worked example

A trial balance has debit total £185,400 and credit total £185,670. What should be done?

1. The credit side is £270 larger, so the debit side is short by £270.
2. Open a suspense account with a debit balance of £270 so the trial balance totals agree.
3. Find and correct the errors through the journal, clearing the suspense account.

Answer: Suspense account opened with a debit of £270.

Check yourself

1. The debit column of a trial balance totals £96,340 and the credit column £95,880. What balance is entered in the suspense account?
   Show answer

   £460. Credit side short by 460, so a credit balance of 460 is entered in suspense.

2. Which error will NOT be revealed by a trial balance?
   • Purchases of £900 posted to Purchases as £990
   • Sales day book overcast by £100, with customers' accounts correct
   • Rent paid of £750 debited to Rates
   • A credit balance of £300 listed in the debit column
   Show answer

   Rent paid of £750 debited to Rates. Rent and rates are both expense accounts, so this is an error of commission (wrong account of the same class); the debit and credit are still equal.

3. A sale on credit of £540 is entered in the sales day book as £450. What type of error is this?
   • Error of original entry
   • Transposition affecting one side only
   • Error of commission
   • Compensating error
   Show answer

   Error of original entry. The wrong figure is in the book of prime entry, so both entries use £450.

4. The purchase of office furniture is debited to the Purchases account. What type of error is this?
   • Error of commission
   • Error of omission
   • Complete reversal
   • Error of principle
   Show answer

   Error of principle. A non-current asset has been posted to an account of a different class (goods for resale).

5. In a trial balance, in which column does the balance on the Returns outwards account appear?
   • Debit
   • Credit
   • Either, depending on its size
   • It does not appear
   Show answer

   Credit. Returns outwards (purchases returns) reduce purchases and have a credit balance.

6. Cash sales of £600 are debited to Sales and credited to Cash. Which statement is correct?
   • The trial balance will disagree by £600
   • The trial balance will disagree by £1,200
   • Only the Cash account is wrong
   • The trial balance still agrees but the two balances are wrong
   Show answer

   The trial balance still agrees but the two balances are wrong. A complete reversal: equal debits and credits, so no difference in the totals.

Practise with instant feedback Print this lesson

Sources

• Pearson Edexcel International Advanced Subsidiary/Advanced Level in Accounting specification (issue 2), Unit 1 and Appendices 6 to 8

Last updated 8 November 2026. Spotted a mistake? Tell us.