Trial Balance Errors
Trial balance is a listing of summary debit and credit account in which the total amount of credit side equal to the total amount of debit side. In this case, trial balance will show immediately that there is an error in the posting if total debit does not equal total credit. Hence, trial balance plays an important role in checking if there are any errors in the posting into the accounts.
However, when the trial balance is in balance, it does not always mean that there is no error in the posting into the accounts at all. This is due to there is also a type of error that do not reveal in the trial balance.
Hence, there are two types of error including those that are revealed and those that are not revealed.
Errors not revealed by trial balance
The type of error in the table below will not be revealed by a trial balance (TB):
|Errors not revealed by TB
|Errors of omission on both sides of double entry
|Example: The company forgot to post the $3,000 of utility expense
|Errors of posting on both sides of double entry with the same amount
|Example: Posting $3,200 transportation expense as $3,500 in the accounting entry.
Dr. Transportation exp. 3,500
Cr. Cash 3,500
|Errors of reverse posting in double entry
|Example: Posting $310 maintenance expense in reverse sides as below.
Dr. Cash 310
Cr. Maintenance exp. 310
|Errors of accounting principle
|Example: Posting of $550 of maintenance expense to machinery fixed asset.
Dr. Machinery 550
Cr. Cash 550
Errors revealed by trial balance
Errors that will be revealed by TB are included in the table below:
|Errors revealed by TB
|Errors of posting to the same side of double entry
|Example: Posting both accounts to debit side for $500 expense transaction.
Dr. Cash 500
Dr. Expense 500
|Errors of omission of one side of double entry
|Example: Posting $2,500 rental transaction to expense account only.
Dr. Rental expense 2,500
|Errors of posting where digits of number are reversed on side of double entry
|Example: Posting $450 stationary expense as $540 in expense account.
Dr. Stationary expense 540
Cr. Cash 450
|Errors of original entry
|Example: Making a mistake when entering a sales invoice into the sales day book.
|Errors of adding up
|Example: Making a mistake of totaling on debit side or credit side.