There are several different types of errors that may occur. First, a debit may have been posted as a credit, or vice versa. Another type of error occurs when a debit balance is listed in the credit column, or vice versa. Mathematical or addition errors also happen, such as incorrectly adding the totals of the columns, or math mistakes when balancing accounts.
If an error does exist, there are different methods to use to locate it. However, following a certain series of procedures is often helpful. First, re-add the trial balance columns. Next, find the exact amount by which the trial balance is out of balance. If the amount is divisible by 9, the error may be a transposition or a slide. A transposition error is when the order of the digits in a balance is incorrect, such as 2,589 being written as 2,859. A slide error means that the decimal point is in the wrong position, such as 2,589 being written as 25.89.
Another thing to do after determining the amount your trial balance is out of balance is to scan the trial balance for the exact amount of the difference and also for one-half of the difference. If you have not found your error yet, compare the amounts in the trial balance with the ledger balances. Also verify that every ledger account balance has been included in the proper column of the trial balance. Then, refigure the balance of all ledger accounts. If you still have not located your error, the last step is to trace every posting from the journal to the ledger accounts. When each amount in the journal and ledger is verified, place some kind of mark next to each confirmed figure. When finished, go back through the ledger and the journal for any unconfirmed amounts.
The purpose of the trial balance is to provide proof that the ledger is in balance. Proving that the total of the debits equals the total of the credits provides certain assurances. It provides assurance that all transactions were recorded using equal debits and credits. Assurance is also given that the debit or credit balance of each account was figured correctly. The final assurance is that the account balances in the trial balance have been added up correctly.
Just because the total of the debit balances equals the total of the credit balances, that does not prove that all of the transactions were properly recorded and analyzed. For example, if a transaction occurred that was not recorded in the ledger, that error would not be discovered using the trial balance. The trial balance is still a useful tool. Besides proving that the ledger is in balance, it is a great starting point for the preparation of financial statements.
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