What is a trial balance?

By Book Keeping Pros
Sources checked 15 Oct 2026

Definition

A trial balance is a list of every account in the general ledger with its debit or credit balance at a particular date. If the books have been kept correctly under double-entry bookkeeping, the total of the debit balances equals the total of the credit balances.

A balanced trial balance shows the arithmetic of the books is right, but not that every entry is right. A transaction posted to the wrong account, or left out completely, still balances. So does an entry with its debit and credit the wrong way round, a bill entered twice, or the same wrong amount keyed into both sides. Equal totals are where the checking starts, not where it ends.

That is why a trial balance is reviewed account by account before the financial statements are prepared from it. Accounting software produces one as a standard report for any date. A quick first pass looks at which side each balance sits on. Expense and asset accounts normally sit in debit, and income, liability and equity accounts in credit, so an expense account in credit or a supplier account in debit is worth a closer look. It often points to a refund, an overpayment or an entry posted the wrong way.

Bookkeepers often run the report twice at month end or year end. The first run shows the books as recorded. Adjusting journal entries then go in for items such as accrued expenses, prepayments, depreciation and corrections, and the second run, often called an adjusted trial balance, becomes the base for the reports. Keeping both versions lets your accountant see what changed between them and why.

In Australia

In Australia the financial year runs from 1 July to 30 June, so a business that uses that year takes its year-end trial balance as at 30 June. It is the starting point for the year's profit and loss statement and the balance sheet at 30 June.

The business.gov.au glossary of key financial terms explains double-entry bookkeeping as entering every transaction in two accounts, one side as a debit and the other as a credit. That two-sided recording is what a trial balance tests.

The same glossary describes the chart of accounts as the list a business uses to sort its transactions, with each account standing for a type: income, expense, asset, liability or owner's equity. In that glossary, a balance sheet sets out assets and liabilities to arrive at net assets, and a profit and loss statement lists sales and expenses. Both are named, along with the cash flow statement, as financial statements.

Worked example

Illustrative example: a trial balance at 30 June
Account	Debit (AUD)	Credit (AUD)
Bank	8,200.00
Accounts receivable	3,100.00
Equipment	5,000.00
Accounts payable		1,700.00
Owner's equity		10,000.00
Sales		21,600.00
Rent	9,600.00
Office expenses	7,400.00
Total	33,300.00	33,300.00

Illustrative example only: these rows show the method and are not sourced data.

Common mistakes

Treating a balanced trial balance as proof that the books are right.
Leaving an amount in a suspense account when the trial balance is used for year-end reports.
Preparing year-end reports from a trial balance taken before the bank and credit card accounts are reconciled.
Not checking that the asset, liability and equity balances at the start of a new financial year match the closing balance sheet from the year before, with that year's profit or loss now included in equity.
Editing transactions in a period your accountant has already finalised, which changes the trial balance they worked from.

Common questions

What is the difference between a trial balance and a balance sheet?

A trial balance is a working list of every ledger account and its balance, set out in debit and credit columns to check that the books balance. A balance sheet is a finished report prepared from part of it: only the asset, liability and equity accounts, grouped under headings to show net assets. Income and expense accounts appear line by line on the trial balance, but on the balance sheet only their net result shows, within equity, as profit or loss.

Why might a trial balance not balance?

The totals differ when an entry breaks the double-entry rule or the list itself is wrong. Common causes are an entry with only one side posted, a debit and credit of different amounts, a balance placed in the wrong column, or an addition error. A difference that divides evenly by nine often points to two digits swapped. Accounting software usually will not accept an unbalanced entry, so these gaps turn up mostly in spreadsheets and manual books.

Is a trial balance prepared as at a date or for the year ended?

As at a date. A trial balance lists balances at one point in time, so its heading names that date, for example 30 June. Its income and expense lines do add up activity, but only from the first day of the financial year to that date, because those accounts restart from nil each year. Asset, liability and equity lines show running balances carried forward from earlier years.

Related terms

Related service

Management and cash-flow reports

Monthly reports that show where the business stands.

More about management and cash-flow reports

Sources

Key financial terms
business.gov.au, Australian Government. Current at 15 October 2026, released 9 July 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.