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Fundamentals of Financial and Cost Accounting · Journal and Ledger

How to Prepare a Trial Balance from Ledger Balances

Updated 10 October 2026

A trial balance is a list of all ledger account balances on a date, split into a debit column and a credit column. Under double entry, the two totals should agree. To solve questions, classify each balance as debit or credit, list it in the right column, total both, and compare.

Understand Trial Balance Preparation

Every transaction is recorded twice: once as a debit and once as a credit, for the same amount. So if you add up all debit balances and all credit balances in the ledger, the totals should be equal. A trial balance is the statement that checks this.

It is not an account. It is a statement prepared on a particular date, usually at the end of the year. It lists the closing balance of each ledger account, with debit balances in one column and credit balances in the other.

The ledger is the book where accounts are kept. The trial balance only collects the balances from it. The ledger records transactions account by account. The trial balance summarises the results and checks arithmetical accuracy. Final accounts are then prepared from it.

Agreement of the trial balance shows only that the debit and credit totals are equal. It does not prove the books are fully correct. Some errors do not change the totals, so they stay hidden. Errors that affect only one side, such as posting only one side of an entry or wrong addition of an account, ordinarily make the totals differ, unless another error offsets them.

If the totals do not agree, the difference is often placed in a suspense account temporarily, until the errors are found and rectified.

Key formulas to remember

Basic rule of a trial balance
Total of debit balances = Total of credit balances
This holds when every transaction is fully recorded with equal debit and credit and posted and balanced correctly.
Accounts with debit balances
Debit balances: assets, expenses and losses, drawings, purchases, sales returns, debtors
Cash and bank (if favourable), stock at the start, and furniture also go in the debit column.
Accounts with credit balances
Liabilities, capital, income and gains, sales, purchase returns, creditors
Provisions, loans taken, and discount received go in the credit column.
Suspense difference
Difference = Larger total − Smaller total
The suspense amount is placed on the side with the smaller total, so that both totals agree.

How to solve Trial Balance Preparation questions

Use this method for any question that gives ledger balances or a list of items and asks for the trial balance or its totals.

  1. 1Read the list of balances and note the date and any special instruction.
  2. 2Decide the nature of each item: asset, liability, capital, expense, income, or drawings.
  3. 3Place each item in the debit column or the credit column using the rules of debit and credit.
  4. 4If closing stock is given outside the trial balance (as an adjustment), do not include it in the trial balance. Opening stock is included.
  5. 5Total the debit column and the credit column separately.
  6. 6Compare the totals. If they differ, find the missing or misplaced item, or state the difference as the suspense amount.
  7. 7Answer the exact thing asked, such as a missing figure, a total, or the capital.

Quickest way: Find the missing figure by totals

When to use it: Use when the question gives most balances and asks for one missing item, such as capital, or the total of the trial balance.

  1. Add all the known debit balances.
  2. Add all the known credit balances.
  3. The missing item goes on the side with the smaller total.
  4. Missing figure = Larger total − Smaller total.
  5. Check the options. Eliminate options equal to the sum of both columns, or placed on the wrong side.

Common mistakes in Trial Balance Preparation

  • Putting drawings in the credit column

    Students link drawings with capital, which is a credit.

    Fix: Drawings reduce capital but are shown as a debit balance in the trial balance.

  • Including closing stock in the trial balance

    Students see stock and enter it in any case.

    Fix: Closing stock is an adjustment shown in the Trading Account and Balance Sheet. Only opening stock is in the trial balance, unless the question says it is given in the trial balance.

  • Putting sales returns and purchase returns on the wrong side

    The word return is confused with the original sales or purchase side.

    Fix: Sales returns are a debit. Purchase returns are a credit. They are opposite to sales and purchases.

  • Believing an agreed trial balance means the books are error free

    Students read agreement as proof of correctness.

    Fix: Remember that errors of complete omission (both debit and credit left out), compensating errors, errors of principle and complete reversal of an entry do not affect the totals. Partial omission, where only one side is recorded, ordinarily makes the totals differ, unless another error offsets it.

  • Treating the trial balance as part of the double entry

    It looks like an account, and is prepared from the ledger.

    Fix: It is only a statement. It is not an account, and no entries are posted to it.

  • Putting provisions and reserves in the debit column

    Students think of them as expenses.

    Fix: Provision for doubtful debts and reserves are credit balances.

Worked examples

Example 1

From these balances, find the total of the debit column of a trial balance: Capital ₹2,00,000; Drawings ₹20,000; Purchases ₹1,50,000; Sales ₹2,40,000; Debtors ₹60,000; Creditors ₹40,000; Furniture ₹50,000; Rent ₹30,000; Cash ₹?. The credit column total must equal the debit column total.

Show the solution
  1. Debit items: Drawings 20,000 + Purchases 1,50,000 + Debtors 60,000 + Furniture 50,000 + Rent 30,000 = ₹3,10,000 before cash.
  2. Credit items: Capital 2,00,000 + Sales 2,40,000 + Creditors 40,000 = ₹4,80,000.
  3. Cash is an asset, so it is a debit and fills the gap on the debit side.
  4. Cash = 4,80,000 − 3,10,000 = ₹1,70,000.
  5. Debit total = 3,10,000 + 1,70,000 = ₹4,80,000.

Answer: The total of the debit column is ₹4,80,000, and cash is ₹1,70,000.

Example 2

The debit total of a trial balance is ₹5,40,000 and the credit total is ₹5,15,000. What amount is shown in the suspense account, and on which side?

Show the solution
  1. Debit total 5,40,000 is larger than credit total 5,15,000.
  2. Difference = 5,40,000 − 5,15,000 = ₹25,000.
  3. The credit side is short, so the suspense account is added to the credit side.
  4. After this, both totals are ₹5,40,000.

Answer: ₹25,000 is shown on the credit side as the suspense account.

Exam tips

  • Memorise the debit and credit nature of common accounts. Most questions are decided by this.
  • Questions on errors usually ask which error does not affect the trial balance. Look for complete omission, compensating, principle or complete reversal.
  • If closing stock is given in the adjustments, leave it out of the trial balance.
  • For a missing figure, add each side and take the difference. Do not recompute every item.
  • There is no negative marking, so always mark an answer after eliminating the options.

Practice questions from Journal and Ledger

Trial Balance Preparation: frequently asked questions

What is the difference between a ledger and a trial balance?

The ledger is the book of accounts where all transactions are posted under separate accounts. The trial balance is a statement that lists the closing balances of those accounts to check that debits equal credits. The ledger is a book of record, while the trial balance is only a statement.

Which errors are not disclosed by a trial balance?

Errors of complete omission, compensating errors, errors of principle, errors of commission where the correct amount is posted to a wrong account of the same nature, and complete reversal of an entry are not disclosed. In these cases the debit and credit totals still agree. Other commission errors, such as a wrong amount posted on one side only, do make the totals differ.

Is a trial balance part of the final accounts?

No. It is prepared before the final accounts and is the starting point for them. The Trading and Profit and Loss Accounts and the Balance Sheet are prepared using its balances along with adjustments.

What if the trial balance does not agree?

First recheck addition and the transfer of balances. If the difference remains, find the errors. If it cannot be found at once, the difference is put in a suspense account temporarily and cleared after rectification.