Is the total of Debit and Credit side of Trial Balance the same ?

Correct — A, (a) No, there are some times good reason why they differ. The option is reproduced exactly as the booklet sets it, 'some times' as two words and 'good reason' in the singular; the printing is the Commission's and the sense is plain. The trial balance is a statement listing the closing balances of every ledger account on a particular date, debit balances in one column and credit balances in the other, drawn up to test the arithmetical accuracy of the postings. Under double entry every transaction is recorded with a debit equal in amount to its credit, so if every entry has been journalised and posted correctly the two columns must add to the same figure. That is what the trial balance is for: it is a test, and the point of a test is that it can fail. In practice the columns frequently do not agree, and the difference is never a mystery — an accountant can name the reasons that produce it. A one-sided error is the classic: a debit posted with the corresponding credit omitted, or an amount posted to the correct side of the wrong column. Others are an amount posted with different figures on the two sides, a posting made to the wrong side altogether (which throws the totals out by twice the amount), an error in casting or balancing a ledger account, an error in totalling a subsidiary book, a transposition or slide in writing a figure, and the plain omission of an account balance from the trial balance itself. Where the difference cannot be traced at once it is placed in a Suspense Account so that the final accounts can be proceeded with while the search continues, and the suspense balance is written back when the error is found. The existence of that account in every syllabus is itself the answer to this question: books that always balanced would have no need of it. So the honest answer to 'is the total the same?' is that it ought to be, that it usually is, and that when it is not there is an identifiable accounting reason for the difference — which is what option (a) says.

Why the others are wrong

• (b)Yes, always. — This is the trap the item is built around, and it is wrong on one word — 'always'. Agreement of the two columns is the expected result of correct double entry, not a guarantee that the arithmetic delivers. If it were guaranteed, extracting a trial balance would be a pointless ritual; the reason it is extracted at all is that clerical work goes wrong and the statement is the cheapest way to catch a whole class of mistakes. Every textbook devotes a chapter to errors and their rectification, and the Suspense Account exists precisely to hold a difference that has not yet been traced. There is also a converse worth carrying away, because examiners ask it more often than this one: agreement does not prove the books are right either. Errors of principle (capital expenditure debited to a revenue account), errors of complete omission (a transaction never entered at all), errors of commission that keep the right side (a credit sale posted to the wrong customer), errors of original entry where the same wrong figure is used on both sides, and compensating errors that cancel out all leave the two totals equal. So the trial balance neither always agrees nor, when it does, certifies the accounts.
• (c)Yes, except where the Trial Balance is extracted at the year end. — This option invents an exception and puts it in the wrong place. A trial balance may be extracted on any date the entity chooses — monthly, quarterly, or whenever the ledger is to be checked — and nothing in the mechanics changes with the date. The year end is simply the commonest occasion for one, because the final accounts are prepared from it: the trading and profit and loss account and the balance sheet are built on the balances the year-end trial balance lists. If anything, that is the trial balance drawn up with the most care and the one whose difference is chased hardest, since an unexplained difference at the year end has to be carried into the published accounts through a suspense balance. An option that offers a rule plus a specially carved-out exception is worth testing against the mechanism: if the exception has no mechanism behind it, it has been manufactured to look plausible.
• (d)No, because it is not a Balance Sheet. — Half of this option is the keyed word — 'No' — and the other half is a reason that does not support it, which is what makes it the second-best answer rather than a throwaway. It is quite true that a trial balance is not a balance sheet, and the difference is worth knowing. The trial balance is an internal working list of every ledger balance, nominal accounts included, so wages, rent, purchases, sales and every other expense and income appear on it; it forms no part of the final accounts, it follows no prescribed format, and it is not published. A balance sheet is a statement of assets, liabilities and capital as they stand on a date, prepared after the trading and profit and loss account has absorbed the nominal balances, and for a company it must follow the format prescribed in Schedule III to the Companies Act, 2013. But none of that is a reason why the two columns of a trial balance would fail to agree. The columns disagree because of posting and casting errors, not because of what the statement is called. Note also how the booklet sets this option: the word 'not' is printed in ordinary weight, unlike the bold italic this paper uses when it is warning the candidate that the question itself is negative. Here 'No' and 'Yes' are simply the content of the answers, and nothing is being emphasised.

A trial balance is a statement, not an account and not a book. On a chosen date every ledger account is balanced off and its closing balance is listed — debit balances in the left column, credit balances in the right. Assets, drawings, expenses and losses carry debit balances; liabilities, capital, incomes and gains carry credit balances. Because double entry records equal debits and credits for every transaction, the two columns of a correctly written set of books must total the same. The trial balance therefore performs one job well and two jobs not at all. It proves the arithmetical accuracy of the postings, it provides the summarised figures from which the final accounts are prepared, and it is a convenient single sheet on which the whole ledger can be seen. What it does not do is prove that the entries were made in the right accounts, or that they were made at all. The errors it catches are the one-sided ones — a missing half of an entry, a wrong amount on one side, a wrong-side posting, a mis-cast total. The errors it cannot catch are the ones that keep the two sides equal: omission, principle, commission within the right side, original entry, and compensating errors. When the columns do differ and the difference resists tracing, the amount is carried to a Suspense Account, which lets the final accounts be prepared and is closed as and when the errors behind it are located and rectified.

Key facts

• A trial balance is a statement of the closing debit and credit balances of all ledger accounts on a particular date.
• Its primary purpose is to test the arithmetical accuracy of ledger postings; it is not part of the final accounts.
• Agreement of the two columns is expected under double entry but is not guaranteed, because one-sided errors break it.
• Errors that make a trial balance disagree include one-sided postings, wrong amounts on one side, wrong-side postings, wrong casting or balancing of an account, and omission of a balance from the list.
• Errors that a trial balance cannot disclose include errors of principle, complete omission, commission on the correct side, original entry, and compensating errors.
• An untraced difference is transferred to a Suspense Account so the final accounts can be prepared; the account is closed when the errors are rectified.
• A difference divisible by nine commonly points to a transposition or slide in writing a figure.
• Debit balances belong to assets, expenses, losses and drawings; credit balances to liabilities, capital, incomes and gains.

Common traps

• Reading 'the totals should agree' as 'the totals always agree'. The trial balance is a test, and a test that cannot fail is not a test.
• Believing that an agreed trial balance certifies the accounts. Five families of error leave both columns equal.
• Treating the trial balance as one of the final accounts. It is a working statement that precedes them.
• Forgetting that nominal accounts appear on the trial balance but not on the balance sheet, which is why the two statements look nothing alike.
• Choosing an option because it starts with the right word. Option (d) also begins with 'No' and fails on the reason that follows it.

• practice — not a real PYQ

  Which one of the following errors will not be disclosed by a Trial Balance ?

  • (a)Omission of a ledger balance while listing the balances
  • (b)Purchase of machinery debited to the Purchases Account
  • (c)The Sales Book undercast by ₹ 500
  • (d)An amount of ₹ 450 posted to the debit of an account as ₹ 540

  Answer(b) Purchase of machinery debited to the Purchases Account

• practice — not a real PYQ

  The account to which the difference in a Trial Balance is transferred so that the final accounts may be prepared while the error is traced is known as which one of the following ?

  • (a)Suspense Account
  • (b)Memorandum Account
  • (c)Drawings Account
  • (d)Contra Account

  Answer(a) Suspense Account