Errors that affect the trial balance usually involve only one account in any transaction. That account has either one of the following: Rectification of trial balance errors requires only one entry in the relevant account. This brings the trial balance back to agreement. However, when a trial balance is out of the agreement at the end of a period, it is common to open a Suspense Account and to enter the difference in trial balance into this account. The entry made in the suspense account is equal to the amount of difference in the two columns of the trial balance. It is made on the side that has a smaller total in the trial balance. Therefore, if the Dr. side of the trial balance has a total of $64,380 and the total of the Cr. side is $64,210, the Suspense Account would appear as follows: Opening a suspense account brings the trial balance into agreement. If an error is discovered after a suspense account has already been opened, the rectification entry must be a double entry and passed through the suspense account.What Errors Affect the Trial Balance?
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Trial Balance Errors FAQs
The primary purpose of a Trial Balance is to ensure that the debits equal the credits in a company's accounting records, thus proving the mathematical accuracy of these records.
There are two types of errors that can affect the Trial Balance: over-debits and under-credits. Over-debits occur when an account is debited more than it should be, while under-credits happen when an account is credited less than it should be.
Errors in the Trial Balance can be corrected by making a single entry into the relevant account. This will bring the Trial Balance back into agreement. However, if a Trial Balance is out of agreement at the end of a period, it is common to open a suspense account and enter the difference into this account.
Some common Trial Balance errors include: • Miscalculation of transactions • Incomplete journal entries • Errors in posting journals to the ledger • Incorrect ledger account balances • Unrecorded transactions • Duplicate transactions • Non-cash transactions not included in the Trial Balance • Transactions outside the accounting period being included in the Trial Balance.
A Trial Balance is a statement that lists all of the accounts in an entity's General Ledger and their ending balances. A balance sheet is a Financial Statement that reports an entity's assets, liabilities, and equity at a specific point in time.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.
