Trial balance is prepared with the help of ledger accounts, cash book and bank book.  It is compulsory for every business firm to prepare trial balance because without preparing the trial balance, it is not possible to prepare final accounts. More over, with the help of trial balance, arithmetical mistakes in entries, postings and balancing, can be traced out.

After posting the entries from day books into ledger, the balancing of individual accounts are done.

Balancing means the difference between the total of debit entries and credit entries of a particular account on a particular date. If the total of debit side of ledger is more than the total of credit side on a particular date then the balance shall be called as Debit balance or Dr. Balance. Similarly, if the total of credit side of a ledger is more than total of debit side then it is Credit Balance or Cr. Balance. If the total of both sides of ledger are equal then it is NIL.

Cash balance never goes in negative.

Regarding balancing of Bank Book, If the total of receipt side is more than total of payment side then it will be Debit Balance and if total of payment side is more than total of receipts side then it will be credit balance.

Now from the following example, we will try to understand trial balance.

What is Trial Balance? Trial balance is periodical statement which is made on a particular date with the help of the ledger and cash books to check the arithmetical errors in the accounts. The closing balances of the accounts are shown in trial balance on a particular date. It is not possible to make Trading Account, Profit & Loss Account and Balance Sheet unless the trial balance is prepared. Closing balance means the balances of ledger accounts at the date on which the trial balance is prepared.

Trial balance is prepared in tabular form. It contains debit column for debit balance of ledger accounts and credit column for credit balances of ledger accounts. Thus, the trial balance shows the summary of closing balances of all accounts on a particular date.


Illustration:- Prepare the trial balance of M/s ABC  Agencies with the help of the following account balances, taken from ledger as on 30.06.2015:-

S.N.         ACCOUNT HEADS                        Dr. OR Cr.                       LEDGER BALANCES



1            Machinery Account                                     Dr.                                      200000/=

2.          Furniture Account                                        Dr.                                       15000/=

3.          Bank of India Account                                  Dr.                                       25000/=

4.         Purchase Account                                         Dr.                                  1200000/=

5.         Sales Account                                               Cr.                                  1400000/=

6.        Opening Stock                                                Dr.                                   400000/=

7.         Cartage Expenses Account                           Dr.                                      5000/=

8.         Salaries Expenses Account                           Dr.                                   21000/=

9.         Telephone Expenses Account                        Dr.                                     2000/=

10.       Cash Balance  (or) Cash in Hand                  Dr.                                   10000/=

11.       M/s Morning Place                                          Cr.                                    5000/=

12.       M/s Gift House                                               Dr.                                   55000/=

13.       Capital Account                                             Cr.                                 528000/=

14.       Closing Stock                                                Dr.                                 120000/=





PARTICULARS                     AMOUNT DR.              AMOUNT CR.

Machinery Account                      200000.00

Furniture Account                          15000.00

Bank of India                                  25000.00

Purchase Account                      1200000.00

Sales Account                                                                      1400000.00

Opening Stock                             400000.00

Cartage Expenses Account            5000.00

Salaries Expenses Account           21000.00

Telephone Expenses Account        2000.00

Cash In Hand                                  10000.00

M/s Morning Place                                                                  5000.00

M/s Gift House                            55000.00

Capital Account                                                                   528000.00


TOTAL                                  1933000.00                     1933000.00


  1. Closing stock is never shown in trial balance.
  2. The Totals of both sides of Trial Balance must be equal.
  3. If the totals of both sides of Trial balance are not equal then the following steps should be taken to find out the mistakes:-
  • Recheck the totals of trial balance.
  • Make sure that the balances of ledger are correctly written in trial balance i.e. credit balance in credit side of trial balance and debit balance of ledger in debit side of trial balance should be written.
  • Check the totaling and balancing of ledger.
  • Make sure that each and every balance of ledger is entered in trial balance.
  • To check that each and every entry is posted in to ledger in correct side.
  • To check that the correct amount is posted in to ledger.

By doing above exercise one can easily trace out the differences in totals of both sides of trial balance.