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.
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.
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.
Worked example
| 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.
Related terms
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.