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Friday, February 19, 2010

Errors Disclosed by a Trail Balance

The following errors are revealed by the trial balance showing disagreement.
  1. Posting of wrong amount: Sometimes, wrong amount is posted in one of the two accounts. For example goods sold of $500 are correctly entered in credit side of sales account but it was debited in cash account as $550. There is a difference in amount of $50. As a result trial balance shows the disagreement.
  2. Posting on the wrong side: When an item is by mistake posted on the wrong side of an account in the ledger, it would cause disagreement in the trial balance. Suppose, wages paid of $1500. In this case, wages account must be debited by $1500. But wages account was debited accurately however cash account was also debited instead of crediting it. It created the excess amount in debit side.
  3. Wrong totaling of subsidiary books: When there is error in totaling of subsidiary books, that will cause disagreement of trial balance. Suppose sales book has been totaled $1000 instead of $1050.
  4. Wrong totaling or balancing of ledger account: Sometimes, errors may be committed in writing totaling or balancing of ledger account the trial balance will disagree.
  5. Ommission to post an amount into ledger: When an aspect of transaction is omitted to post in ledger account, the trial balance shows disagreement. For example, cash paid for interest $200. Interest account was debited by the same amount but it was omitted to credit in cash account.
  6. Ommission to enter an amount in trial balance: If an amount is omitted to enter in trial balance while transferring from ledger balances, then the trial balance shows disagreement.

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