What Is a Trial Balance?
A trial balance is a report that lists the ending balances of all general ledger accounts, with debits in one column and credits in another, to verify that total debits equal total credits. It's a checkpoint before financial statements are prepared.
What a trial balance is and why it matters
The trial balance is where a business confirms its books are internally balanced. Because double-entry bookkeeping requires debits to equal credits, the two columns of a trial balance should total to the same figure — if they don't, there's a recording error to find before going further. It's typically run at period-end, first as an unadjusted trial balance, then as an adjusted trial balance after adjusting entries (accruals, deferrals, depreciation) are posted. The adjusted trial balance is the direct source for building the income statement and balance sheet. A balanced trial balance doesn't guarantee zero errors — a transaction posted to the wrong account still balances — but an unbalanced one guarantees there's a problem.
A worked example
At month-end, a firm runs a client's trial balance. Debit-balance accounts: Cash $30,000, Accounts Receivable $45,000, Equipment $80,000, Expenses $60,000 — total debits $215,000. Credit-balance accounts: Accounts Payable $25,000, Loan $50,000, Equity $60,000, Revenue $80,000 — total credits $215,000. The columns match at $215,000, so the books are in balance and the firm can proceed to adjusting entries and financial statements.
How firms handle it today
Firms generate the trial balance at close, confirm it balances, post adjusting entries, then use the adjusted trial balance to build the financial statements — investigating immediately if the columns don't tie.
How OCTA Flow relates to the trial balance
OCTA Flow can produce and check the trial balance as part of the close procedure — confirming it ties, posting standard adjusting entries, and flagging accounts that look off — so your team reviews a balanced, adjusted starting point for the statements.
Related terms
- General ledger
- Debit
- Financial statements
- Journal entry
- Month-end close
FAQ
What does a trial balance check?
That total debits equal total credits across all general ledger accounts — a basic test that the books are in balance.
What's the difference between an unadjusted and adjusted trial balance?
The unadjusted version is run before adjusting entries; the adjusted version follows them and is used to prepare financial statements.
Does a balanced trial balance mean no errors?
No — it only confirms debits equal credits. An amount posted to the wrong account still balances, so other checks are still needed.
See how firms automate the close and trial balance → start an OCTA Flow trial.