WHY THE TRIAL BALANCE MAY NOT BALANCE

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The trial balance, as I told you before, is a schedule listing the balances of ledger accounts of a business at any given time. 

It is not an account, it is only a statement or schedule. Due to the double-entry principle, the trial balance is expected to balance always.

However, the trial balance may not balance due to certain reasons. Let us examine these reasons carefully.

1. Failure to post in one account: Every transaction, as you are aware, has two aspects. That is, for every debit entry, there is a corresponding credit entry and vice versa. 

But, what happens if only one aspect of an account is recorded?

An error of omission of posting in one account.

To define it, failure to post in one account error occurs when the debit/credit entry is posted without the corresponding credit/debit entry.

Suppose, an amount of N200 paid to James's is debited to James account, but not credited to the Cash account. 

The trial balance will not balance as the total of the debit column will be N200 more than the total of the credit column.

2. Incorrect totalling of the trial balance: If an accountant makes a mistake in totalling the trial balance's amounts, the trial balance will not balance.

For example, if the debit column total was computed as N340 instead of N430 and the credit column was totalled as N430. 

The trial balance will not balance in this case because the debit side of the trial balance is N90 less than the credit side.

3. Double posting in one account: If an accountant makes the error of posting an entry twice to the debit or credit side of an account, the trial balance will not balance since there will be extra debit or credit.

For example, if N40000 was debited twice to the purchasing account, the debit column of the trial balance will be N40,000 more than the credit column, resulting in a trial balance disagreement. 

4.  Posting on the incorrect side of an account: If a transaction is accidentally posted to the wrong side of an account, the trial balance will not balance.

Posting on the wrong side of an accounting error arises when an account that is supposed to be credited is debited and vice versa.

Assumed that our company received N10,000 from a customer, which was debited to a cash account. but credited to trade receivable instead of credit

This means that until the error is corrected, the credit column will be N20,000 more than the debit side of the account.

5. Wrong casting: The trial balance will not balance if the sum of the subsidiary book is undercast or overcast.

For example, If the total of the sales day book is overcast by N2000, the credit column of the trial balance will be N2000 higher than the debit side when the overcast sum of the sales day book is posted to the ledger.

Just to be clear,  wrong casting is what is called casting error in many textbooks

6. Failure to include an account in the trial balance: This is one of the most common errors in accounting. It occurs when the balance of one account is omitted from the trial balance.

For example, if the balance of the purchases account is omitted, the debit column will be undercast and the trial balance will not tally. 

7. Entering an account's balance in the wrong column of the Trial Balance: If an account that is supposed to be entered in the debit column of the trial balance is entered credit column, the trial balances will not tally.

Similarly, If an account that is supposed to be entered in the credit column of the trial balance is entered debit ​column, the trial balances will not tally.

To illustrate, If cash in hand is entered in the credit column of the trial balance, The trial balance will be t balanced because asset accounts are usually entered in the debit side of the trial balance.

Final words

Generally, The trial balance will not balance when an error affects only one aspect (debits or credits) of recording of business transaction 

However, if an error affects two aspects of the ledger equally, the trial balance will be balanced. 

in the next post, we'll talk about this error that won't cause disagreement in the trial balance.

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