What is Trial balance?

A trial balance is a list of every account in the general ledger with its balance, shown as a debit or a credit. Because double-entry bookkeeping records every transaction as equal debits and credits, the two columns must add up to the same total. If they do not, something has been posted wrongly.

How to read one

A trial balance for a period usually shows, for each ledger account, the opening balance, the debits and credits posted during the period, and the closing balance. Assets and expenses normally carry debit balances; liabilities, equity and income normally carry credit balances. In a microfinance bank, customer deposits appear as liabilities, loans to customers as assets, and interest earned on loans as income.

Example: a teller receives a ₦50,000 deposit. The till (an asset) is debited ₦50,000 and the customer's savings account (a liability) is credited ₦50,000. Both columns of the trial balance rise by ₦50,000 and it still agrees.

What it proves, and what it does not

A balanced trial balance shows that debits equal credits. It does not prove every posting went to the right account: a deposit credited to the wrong customer, or an entry left out on both sides, still balances. That is why institutions also reconcile their bank accounts and tills and review unusual balances before producing the balance sheet and profit and loss.

In Zenus Banking Pro

Every transaction posts balanced debits and credits to the general ledger as it happens, so the trial balance is available at any time rather than after a month-end exercise. The trial balance is run for a chosen date range and shows each account's opening balance, the period's debits and credits and the closing totals, and states whether the totals agree.