Trial Balance Errors - How To Find Errors In Trial Balance
Identifying and Overcoming with the Errors of the Trial Balance
- Divide the difference in the trial balance by two, find out if some figure equal to that (half the difference) appears in the trial balance. It is possible that a balance might have been placed on the wrong side thus causing double the difference.
- Dividing the difference by 9. If the difference is evenly divisible by 9 the error may be a transposition of figures. e.g. If 797 is written as 977, the difference is 180 and 180 is evenly divisible by 9.
- Check the nature of the amount of the difference.
If the amount is in round figure, it is quite possible that the mistake is made in casting or in carrying forward the totals of subsidiary books or in balancing the accounts.
If the amount is not a round figure, it is possible that mistake might have been committed in posting.
If the difference is of an amount which recurs quite often in the accounts, first check the posting of those figures.
If the difference is of a large amount, it is better to compare the trial balance of the current year with that of the previous. Now find out if particular balance of the account has not been included in the trial balance. Also see that the figures of accounts under the same head do not show abnormal variation and balances fall on the same side of the trial balance. In case of heavy variation look to the account to establish the cause of variation.
- Check the total of schedule of debtors and creditors and find out that all balances have been included in the list.
- Check that cash and bank balances have been included.
- Check casting and carry forward of subsidiary books.
- Check thoroughly books of subsidiary records, posting to ledger and balancing of accounts.
- Trial Balance
A trial balance is a summary of balances of all accounts recorded in the ledger. The trial balance is prepared at the end of a chosen period which may either be monthly, quarterly, half-yearly or annually or as and when required.