Help in Locating Errors
When a trial balance does not tally, the accountant knows that an error has occurred.
The error (or errors) may have occurred at one of those stages in the accounting process:
- Totaling of subsidiary books,
- Posting of journal entries in the ledger,
- Calculating account balances,
- Carrying account balances to the trial balance, and
- Totaling the trial balance columns.
For example, the book-keeper may debit a correct amount in the wrong account while making the journal entry or in posting a journal entry to the ledger. This error would cause two accounts to have incorrect balances but the trial balance would tally. Another error is to record an equal debit and credit of an incorrect amount. This error would give the two accounts incorrect balances but would not create unequal debits and credits. As a result, the fact that the trial balance has tallied does not imply that all entries in the books of original record have been recorded and posted correctly. However, equal totals do suggest that several types of errors probably have not occurred.