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Significance of Agreement of Trial Balance

It is important for an accountant that the trial balance should tally. Normally a tallied trial balance means that both the debit and the credit entries have been made correctly for each transaction. However, the agreement of trial balance is not an absolute proof of accuracy of accounting records. A tallied trial balance only proves, to a certain extent, that the posting to the ledger is arithmetically correct. But it does not guarantee that the entry itself is correct.

There can be errors, which affect and do not affect the equality of debits and credits. The common errors include the following:
  • Error in totaling of the debit and credit balances in the trial balance.

  • Error in totaling of subsidiary books.

  • Error in posting of the total of subsidiary books.

  • Error in showing account balances in wrong column of the trial balance, or in the wrong amount.

  • Omission in showing an account balance in the trial balance.

  • Error in the calculation of a ledger account balance.

  • Error while posting a journal entry.

  • Error in recording a transaction in the journal: making a reverse entry, i.e., account to be debited is credited and amount to be credited is debited, or an entry with wrong amount.

  • Error in recording a transaction in subsidiary book with wrong name or wrong amount.

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