What would cause the debit balance to be higher than the credit balance on the trial balance?

A trial balance is part of the accounting cycle. If the trial balance is equal, then the accountant or bookkeeper can proceed to the next step of the accounting process. But if a problem is discovered with the trial balance, finding the error is necessary in order to move forward in the process.

What Is a Trial Balance?

The trial balance is the first attempt at balancing a business' books at the end of an accounting period. As mentioned above, the trial balance is part of the accounting cycle and the correct sequence of accounting procedures. It's compiled after all general journal entries have been posted to the general ledger and those totals have been computed. For example, if there were 12 general journal entries that involved cash, there should be 12 general ledger entries that involve cash. The final value for the general ledger is the amount that is included in the trial balance.

Debits and Credits

The trial balance has two sides, the debit side and the credit side. Debits include accounts such as asset accounts and expense accounts. Credits are accounts such as income, equity and liabilities. For instance, the Cash account is an asset account and is on the debit side, while Accounts Payable is a liability and therefore would be placed on the credit side. The debit side and the credit side must balance, meaning the value of the debits should equal the value of the credits. A trial balance will not balance if both sides do not equal, and the reason has to be explored and corrected.

Causes of an Unbalanced Trial Balance

A trial balance might fail to balance for a variety of reasons. For example, if you transposed numbers while posting from the general journal to the general ledger, or from the ledger to the trial balance sheet, this could cause the trial balance to not equal out. Also, if you made a math error, this can cause a problem too. Or perhaps you credited something that should have been debited or vice versa, or you applied a transaction to the wrong account. If you bought $500 worth of office supplies with your credit card but accidentally posted it as a cash transaction, this will throw off your trial balance.

How to Find the Error

If the amount is substantial, start with the larger transactions made during the month and make sure no numbers were transposed and that the transaction was applied to the proper ledger account. A trick for checking for a transposition error is divide by 9. If the difference between the two sides is divisible by 9. So, if the debit side equals $4,585 and the credit side equals $4,855, there's a chance that it's a transpositional error since the difference ($270) is divisible by 9. If that checks out, recalculate the ledgers with the most transactions, which for most businesses is cash and sales. If the amount is an even number - for example $500 - check to see if a transaction for that amount occurred and that it was posted properly.

If All Else Fails...

You'll have to go through each transaction, starting with the journal entries and make sure they were posted correctly to the general ledgers, and then double check the ledger balances and make sure those were placed in the trial balance correctly.

Important to Note:

An unbalanced trial balance definitely indicates a problem. However, just because a trial balance is equal on both sides, that does not mean there aren't errors. It is important that care and detail are used when completing these financial transactions since a business' bottom line depends on what the books say about it.

What Is a Trial Balance?

A trial balance is a bookkeeping worksheet in which the balance of all ledgers are compiled into debit and credit account column totals that are equal. A company prepares a trial balance periodically, usually at the end of every reporting period. The general purpose of producing a trial balance is to ensure the entries in a company's bookkeeping system are mathematically correct.

Trial Balance

How a Trial Balance Works

Preparing a trial balance for a company serves to detect any mathematical errors that have occurred in the double-entry accounting system. If the total debits equal the total credits, the trial balance is considered to be balanced, and there should be no mathematical errors in the ledgers. However, this does not mean there are no errors in a company's accounting system. For example, transactions classified improperly or those simply missing from the system could still be material accounting errors that would not be detected by the trial balance procedure.

Key Takeaways

• A trial balance is a worksheet with two columns, one for debits and one for credits, that ensures a company’s bookkeeping is mathematically correct. 
• The debits and credits include all business transactions for a company over a certain period, including the sum of such accounts as assets, expenses, liabilities, and revenues. 
• Debits and credits of a trial balance being equal ensure there are no mathematical errors, but there could still be mistakes or errors in the accounting systems.

Requirements for a Trial Balance

Companies initially record their business transactions in bookkeeping accounts within the general ledger. Depending on the kinds of business transactions that have occurred, accounts in the ledgers could have been debited or credited during a given accounting period before they are used in a trial balance worksheet. Furthermore, some accounts may have been used to record multiple business transactions. As a result, the ending balance of each ledger account as shown in the trial balance worksheet is the sum of all debits and credits that have been entered to that account based on all related business transactions.

A company’s transactions are recorded in a general ledger and later summed to be included in a trial balance. 

At the end of an accounting period, the accounts of asset, expense or loss should each have a debit balance, and the accounts of liability, equity, revenue or gain should each have a credit balance. However, certain accounts of the former type may have also been credited and certain accounts of the latter type may have also been debited during the accounting period when related business transactions reduce their respective accounts' debit and credit balances, an opposite effect on those accounts' ending debit or credit balances. On a trial balance worksheet, all the debit balances form the left column, and all the credit balances form the right column, with the account titles placed to the far left of the two columns.

Special Considerations

After all, the ledger accounts and their balances are listed on a trial balance worksheet in their standard format, add up all debit balances and credit balances separately to prove the equality between total debits and total credits. Such uniformity guarantees there are no unequal debits and credits that have been incorrectly entered during the double-entry recording process. However, a trial balance cannot detect bookkeeping errors that are not simple mathematical mistakes. If equal debits and credits are entered into the wrong accounts, a transaction is not recorded or offsetting errors are made with a debit and credit at the same time, a trial balance would still show a perfect balance between total debits and credits.

What if debit is not equal to credit in trial balance?

What causes an imbalance in the trial balance?

Which of the following errors could cause the trial balance totals to be unequal?

What does it mean when credit is higher than debit?