# How to prepare a trial balance

Run a list of every account and its balance at one date. Debit balances go in one column and credit balances in the other. The two columns must add to the same total. If they do not, find the error before you build reports.

Free tool: [Trial balance generator](https://www.pulsify.tech/free-tools/trial-balance-generator/). Enter your account balances and see whether debits equal credits.

## Why it matters

The trial balance is the base of the financial statements. It proves that your double entry adds up.

It also shows unusual balances, such as a negative stock account or a large suspense balance.

## The steps

1. **Set the date.** Use the period end, such as 31 October or 30 June.
2. **Close the period.** Post all entries, accruals and depreciation for the period first.
3. **Run the report.** Run the trial balance from your accounting system for that date.
4. **Sort by type.** Assets, liabilities, equity, income and expenses. Check each account has the normal balance.
5. **Add the columns.** Add all debit balances and all credit balances. The totals must agree.
6. **Find any difference.** If they do not agree, look for a one-sided entry, a transposed number or a missing posting.
7. **Review unusual balances.** Check suspense, clearing and ask-my-accountant accounts. They should be zero or explained.
8. **Save a copy.** Save it as PDF with the date. Use it to build the profit and loss and the balance sheet.

## Worked example

Example Distribution Pty Ltd has these balances at 31 October.

| Account | Debit | Credit |
| --- | --- | --- |
| Bank | A$51,400 |  |
| Accounts receivable | A$22,000 |  |
| Stock | A$80,000 |  |
| Accounts payable |  | A$10,260 |
| GST liability |  | A$24,090 |
| Owner equity |  | A$100,000 |
| Sales |  | A$60,000 |
| Cost of sales | A$30,000 |  |
| Wages | A$12,000 |  |
| Rent | A$2,000 |  |
| Insurance | A$1,000 |  |
| Other expenses | A$5,950 |  |
| Total | A$204,350 | A$194,350 |

The totals differ by A$10,000, so the trial balance does not balance. The team checks postings and finds a A$10,000 owner contribution recorded on one side only. After the fix both columns total A$204,350.

## Common mistakes

- Running it before the period is complete.
- Forcing a balance with a suspense entry.
- Ignoring accounts with the wrong sign.
- Not saving a dated copy.

## Common questions

### Does a balanced trial balance mean the books are right?

No. It proves debits equal credits. It does not catch a wrong account or a missing entry.

### What is an adjusted trial balance?

The trial balance after year-end adjustments such as accruals and depreciation.

### Can accounting software get it wrong?

Software keeps debits equal credits. Errors usually come from what was entered.

## Next step

Use the [Trial balance generator](https://www.pulsify.tech/free-tools/trial-balance-generator/) first. Then see [faster month-end close with Pulsify](https://www.pulsify.tech/solutions/faster-close/).

Source: https://www.pulsify.tech/how-to/prepare-a-trial-balance/ (last checked 2026-10-20)