WHAT IS TRIAL BALANCE ?
A trial balance refers to a tabular statement in which the balances of all ledger books are assembled into debit and credit columns, in order to check the arithmetical accuracy of the entries posted in the ledger accounts.
DISAGREEMENT OF TRIAL BALANCE
If the total of all the debit columns match the total of credit columns the trial balance is said to be balanced i.e. the accounts are arithmetically accurate. However ,when the totals of the debits and credit column of a trial balance are not the same, it is known as disagreement of a trial balance. It occurs due to the errors that might have occurred during journalizing and posting the entries into a ledger.
When such a disagreement occurs, it is necessary to tally the trial balance in order to ensure the accuracy of final accounts .
CAUSES OF DISAGREEMENT OF TRIAL BALANCE.
The following are the some of the errors which cause the trial balance to disagree :-
- Wrong Totalling of Subsidiary books :- If the total of any subsidiary book is wrongly cast, it would cause a disagreement in the Trial Balance.
- Posting of the wrong amount :- If a wrong amount is posted on either side of the trial balance , it will lead to disagreement of trial balance. For example, purchases of goods worth Rs 575 made from Mr. X wrongly credited to his account as Rs 757 instead of Rs 575. This means Mr. X’s account is over credited by Rs 182 ( 757 – 575 ) . Therefore, the credit side of trial balance will exceed by Rs 182.
- Posting to the wrong side of account :- If an entry is posted to the wrong side of the account , this will also cause the trial balance to disagree. For instance, A credit sales made to a customer for Rs 2,000 has been posted to the credit side of his account instead of the debit side. As a result of this error, the credit side of the Trial Balance will exceed by Rs 4,000 (double the amount of error).
- Posting twice to ledger :- If an item is posted twice in the ledger by mistake, then it will result in disagreement of trial balance. For example, For example wages paid of Rs 5,000 have been posted to wages account twice by mistake.
- Omission of an account from trial balance
- Wrong additions or balancing of ledger accounts.
- Balance of account written to the wrong side of the Trial Balance
- Mistake in casting totals of debit and credit money columns of trial balance.
After the detection of errors in trial balance, the errors are to be corrected by passing appropriate journal entry or bringing correction in the ledger account concerned complying with the accounting principle.