Trial Balance, Rectification of Errors and Adjusting & Closing Entries

A Trial Balance is a statement prepared at the end of an accounting period listing all ledger account balances to verify that total debits equal total credits, confirming arithmetical accuracy of the books.

Total of debit balances must equal total of credit balances.

The primary purpose is to verify the arithmetical accuracy of ledger postings; if total debits equal total credits, it indicates that double-entry bookkeeping has been correctly applied.

Error of commission involving wrong side posting.

A Trial Balance cannot detect errors of omission, errors of commission, errors of principle, compensating errors, and errors where wrong amounts are posted to wrong but same-side accounts.

Both debit and credit entries are posted to opposite accounts entirely.

An error of omission occurs when a transaction is completely omitted from the books of accounts and is not recorded at all, so it does not affect the Trial Balance totals.

The difference amount is placed in a suspense account temporarily.