Basically, the trial balance indicates the arithmetical accuracy of the accounting entries. The trial balance is made with the closing balances of the ledger and if the totals of both sides of trial balance are equal then it indicates that the totaling and balancing of the accounts are perfectly correct. Though the totals of both sides of the trial balance are agreed even then there are plenty of errors which can not be disclosed by the trial balance. The errors which are not disclosed by the trial balance are as under:-
- Omission of an entry in the day book or subsidiary book:– If a voucher is completed omitted to be entered in a day book then it will not affect the total of the trial balance. For example a purchase bill was not entered in purchase day book. Neither it will be shown in purchase account nor it will be posted in creditor’s account. Therefore, it will not be shown in trial balance also.
- Posting the entry in correct side but to a wrong account:– If an entry is posted to correct side but in to a different account head then also the total of trial balance will not affected. For example amount paid to Mr. X, debited in day book to Mr. X correctly but at the time of posting the amount was posted in to the account of Mr. Y’ debit side. In trial balance, the balance of Mr. Y will appear instead of Mr.X in debit side.
- Wrong amount entered in day book:- While making the entry in day book, if wrong amount is written at initial stage then also the error can not be disclosed though the totals of trial balance are agreed. For example:- Amount of purchase for Rs.50000/= was written in purchase day book as Rs.5000/= . In this case also, the total of trial balance will not be affected.
- Errors of principles:– When the proper allocation of account head is not done at the time of making the journal voucher that is called errors of principles. For example: If Machinery purchased is debited to purchase account in stead of machinery account then also the trial balance is not going to disclose you the correctness of account head.
- Compensatory errors:– These are the errors which arises due to excess-debits or under-debits of accounts but the same are neutralized by excess-credits or under-credits in same account or other accounts. For example:- excess posting of purchase amount by Rs.10000/= neutralized by excess posting of a supplier’s account by Rs.10000/=. Thus, these types of errors also can not be disclosed by the trial balance though the totals of trial balance are agreed.
Thus, we can not say that the trial balance is the full proof evidence of the accounting entries.
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