6.4. Significance of Agreement of Trial Balance

. . Significance of Agreement of Trial Balance It is important for an accountant that the trial balance should tally. Normally a tallied trial balance means that both the debit and the credit entries have been made correctly for each transaction.

However, as stated earlier, the agreement of trial balance is not an absolute proof of accuracy of accounting records. A tallied trial balance only proves, to a certain extent, that the posting to the ledger is arithmetically correct. But it does not guarantee that the entry itself is correct. There can be errors, which affect the equality of debits and credits, and there can be errors, which do not affect the equality of debits and credits.

Some common errors include the following: Error in totalling of the debit and credit balances in the trial balance. Error in totalling of subsidiary books. Error in posting of the total of subsidiary books. Error in showing account balances in wrong column of the tiral balance, or in the wrong amount.

Omission in showing an account balance in the trial balance. Error in the calculation of a ledger account balance. Error while posting a journal entry: a journal entry may not have been posted properly to the ledger, i.e., posting made either with wrong amount or on the wrong side of the account or in the wrong account. Error in recording a transaction in the journal: making a reverse entry, i.e.,