Meaning And Methods Of Locating Errors In Trial Balance

In the double entry system every entry has its corresponding credit and debit. It follows that at any given point of time, the posting from Journal, day books and cash book to the ledger is completed, the debit balances standing in all the ledgers including the cash book will equal the credit balances. At the end of the financial period (or at some other date) these balances are extracted and a schedule is prepared in journal form is called a Trial Balance. Thus the total of debit balances appearing in the Trial Balance must agree with the total of credit balances of appearing in the Trial Balance.

Objects of preparing Trial Balance:

• It forms the very basis on which final accounts are prepared.
• It helps in knowing the balance on any particular account in the ledger.
• It is used as a test of arithmetical accuracy.

However, a Trial Balance is not a conclusive proof of absolute accuracy of the accounts. It does not indicate the absence of an error. Thus, a non-tallied Trial Balance indicates the presence of book-keeping errors.

Methods of locating errors in Trial Balance:

The following are some of the ways of detecting errors in the Trial Balance –

• When digits are wrongly interchanged — it causes the error to occur in multiples of 9. Therefore the difference is a multiple of 9; there are good chances of error occurring in transposition of digits, i.e. when 97 are recorded as 79.
• When the difference is an even number divide by 2 and check whether such an amount is wrongly entered on the wrong side of debit or credit.
• If the difference is a multiple of 10 or 100 or 1000, then there are chances of the error occurring in the totaling.
• Ensure that all the balances of ledger accounts have been considered in the Trial Balance.
• Ensure that there is no omission of recording the balances from the subsidiary books or cash book.
• Check all the postings and totals