What a Balanced Trial Balance Can and Cannot Prove

A trial balance tests whether ledger debit balances equal ledger credit balances. The adjusted version performs that check after period-end adjustments have been journalized and posted, before financial statements are prepared.

Follow the sequence

1. Start with ledger balances after ordinary transactions.
2. Identify earned revenues and incurred expenses missing from those balances.
3. Journalize and post the required adjustments.
4. List each resulting account balance on its actual debit or credit side.
5. Total both columns and investigate any difference.

Equality has a narrow meaning

An omitted transaction can leave both columns equal. So can using the wrong account, recording the same incorrect amount on both sides, or duplicating a balanced entry.

For example, recording a 600-dollar electricity bill as a debit to Equipment and a credit to Accounts Payable keeps the ledger balanced. Yet expenses are understated and assets overstated. Correcting the classification requires debiting Utilities Expense and crediting Equipment by 600 dollars; Accounts Payable was already correct.

Use two kinds of review

Arithmetic review checks totals, posting direction, and transferred balances. Substantive review checks original documents, account classification, completeness, and period cutoff. Passing the first check does not replace the second.

Do not insert an unexplained balancing amount to force equality. Trace the discrepancy to its source and correct the underlying entry.