TRIAL BALANCE, RECTIFICATION OF ERRORS AND ADJUSTING & CLOSING ENTERIES

A Trial Balance is a statement listing all ledger account balances (debit and credit) at a specific date. Its primary purpose is to verify the arithmetical accuracy of ledger postings by confirming that total debits equal total credits.

Two columns listing all debit and credit balances from ledger.

Errors of omission, errors of commission, errors of principle, and compensating errors are not revealed by a Trial Balance. These errors still leave total debits equal to total credits, so the Trial Balance agrees despite the mistake.

Double-entry bookkeeping principle — every debit has equal credit.

An error of omission occurs when a transaction is completely omitted from the books of accounts — neither the debit nor the credit entry is recorded. Since both sides are missed equally, the Trial Balance still tallies.

Wrong amount entered in books of original entry (journal).

An error of commission occurs when an entry is recorded in the wrong account of the same class, such as debiting Ram's account instead of Shyam's account for a sale. The Trial Balance still agrees because the correct amount is debited and credited.

Error that affects only one side (debit or credit) of accounts.