A trial balance is a report that lists the balance of every account in your general ledger at a point in time, with debits in one column and credits in the other. If the two totals match, your double-entry bookkeeping adds up, but that doesn't prove your books are right.
CFI describes it as covering every type of account: assets, liabilities, equity, revenues, expenses, gains and losses. Shopify calls it a way for businesses to internally audit their double-entry systems, with two goals: confirm that total debits equal total credits, and spot entries that landed in the wrong account. It's an internal working document, not an official financial statement.
What a trial balance includes
Shopify says a trial balance typically has five elements:
- The debit and credit balance for each account.
- The account names.
- The account numbers.
- The dates of the period it covers.
- The totals for each column.
The difference from the general ledger is level of detail. CFI explains that the ledger shows every transaction, account by account, while the trial balance shows only each account's final total. One is the full diary, the other is the summary page.
A worked trial balance example
Here's Shopify's illustration, covering 1 January to 31 March 2022, in US dollars as of October 2026. Each account shows its debit and credit amounts, and the two columns are totalled at the bottom.
| Account (Shopify example) | Debit | Credit |
|---|---|---|
| 101 Cash | $1,825 | $400 |
| 102 Accounts receivable | $725 | $625 |
| 105 Inventory | $400 | $300 |
| 201 Accounts payable | $1,725 | |
| 302 Common stock | $275 | |
| 401 Sales revenue | $925 | |
| 502 Credit card expense | $450 | |
| 505 Utility expense | $550 | |
| 507 Cost of goods sold | $300 | |
| Total | $4,250 | $4,250 |
Both columns come to $4,250, so the books balance. Notice how the account numbers group the types together: the 100s are assets, the 200s liabilities, the 300s equity, the 400s revenue and the 500s expenses. That numbering comes from the chart of accounts behind the ledger.
How to prepare a trial balance
- Close the accounting period.
- List every general ledger account with its balance.
- Put each balance in the debit or the credit column.
- Add up both columns.
- If the totals differ, hunt down the error. If they match, remember that five types of error can still be hiding.
- Post any adjusting entries and prepare an adjusted trial balance.
The catch: five errors a trial balance can't find
A trial balance is good at spotting arithmetic slips in the ledger. But CFI lists five errors that sail straight through, because each one leaves the debits and credits equal:
| Error (CFI) | What went wrong | Why the totals still match |
|---|---|---|
| Omission | The transaction was never entered | Nothing was posted on either side |
| Original entry | The wrong amount was entered | The same wrong amount is on both sides |
| Reversal | The right amounts, but debit and credit were swapped | Both sides still carry the same figure |
| Principle | The right amount and side, but the wrong type of account, such as an expense instead of a liability | The amount is right, only the label is wrong |
| Commission | The right amount, but posted to the wrong account, usually by oversight | The amount is right, only the account is wrong |
That's why I'd treat a balanced trial balance as a good sign rather than proof. If a sale was never recorded at all, the report will balance perfectly and still be wrong.
The adjusted trial balance
The first version you run is the unadjusted trial balance. Shopify explains that an adjusted one follows it, to account for anything missing or misrepresented. Its example: $600 of office supplies bought on a personal credit card leaves a $600 credit excess on the unadjusted version, and the adjusted version corrects it by adding a $600 debit to expenses. Adjustments can also remove advance payments or add liabilities that haven't been recorded yet.
CFI says a trial balance with adjustments shows three sets of figures: the balance before, the adjusting entry, and the balance after. You run it again once the adjustments are posted, to check the debits and credits still match.
A trial balance is only as good as the ledger behind it, which the general ledger sets out.
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Do you still need one if you use accounting software?
Shopify's view is that software now checks debit and credit balances automatically, which has mostly removed the need to produce trial balance documents by hand. They're still useful, though: accountants use them to check their work, and auditors use them to decide which accounts to look at.
It also matters because of what comes next. Xero describes the order at period end: a trial balance is prepared from the general ledger totals, and then the balance sheet, income statement and cash flow statement are produced from it. If you're not sure how those statements differ, here's my guide to the profit and loss account vs the balance sheet. The trial balance is the checkpoint between your day-to-day records and those reports.
My verdict
A balanced trial balance is a good sign, not a clean bill of health. It tells you the arithmetic works. It can't tell you whether every sale was recorded or whether each amount went to the right account. Run it, fix anything that doesn't match, then look down the list for balances that look odd. If your books live in a spreadsheet, small business bookkeeping software will do the matching for you, which leaves your time for the judgement part.
Frequently asked questions
What is the purpose of a trial balance?
To check that total debits equal total credits in the general ledger, and to spot entries posted to the wrong account before the financial statements are prepared.
Is a trial balance a financial statement?
No. CFI says it isn't an official financial statement and is usually an internal document. The financial statements are produced from it.
What errors does a trial balance not detect?
CFI lists five: omission, original entry, reversal, principle and commission. Each leaves the debit and credit totals equal.
What is the difference between a trial balance and a general ledger?
The general ledger records every transaction by account. The trial balance lists only each account's final balance.
What is an adjusted trial balance?
A second trial balance prepared after adjusting entries are posted, to correct anything missing or misrepresented in the first one.
