A trial balance gathers account balances for a date or period and shows debit and credit totals. It bridges the ledger and statements, but can remain balanced when an entry uses the wrong account, period or equally wrong amount on both sides.
Find the error that creates no imbalance
An accountant records an SAR 8,000 maintenance invoice twice. Each entry debits expense and credits a liability by the same amount, so the trial balance remains perfectly balanced. Yet both expense and the supplier balance are overstated by SAR 8,000. Equal totals are the beginning of the review, not its conclusion.
Select accounts by risk rather than simply working down the list. A customer credit balance may be an advance or an unallocated receipt; negative inventory may indicate an issue posted before receipt. Do not immediately change the sign. Inspect the transactions and understand the event. Some unusual balances are correct, while some apparently normal balances contain significant errors.
A working paper can show opening balance, debit movements, credit movements and closing balance. Add a reference to the external reconciliation or supporting subledger: the bank reconciliation for cash, the receivables report for customers and the asset register for fixed assets. These links turn each total into something explainable.
Keep versions before and after adjustments, together with the entries explaining the movement. If management asks why expense fell, you can point to the duplicate reversal. Any unresolved suspense balance should retain its explanation and follow-up date. Spreading it among unrelated expenses simply to clear the account removes the warning without fixing its cause.
Balance is not proof of accuracy
Review combines balance, expected account nature, comparison with prior period or budget, and reconciliation of control accounts to detail. A normally debit account may become credit for a valid reason or an error; the reason must be traced to ledger and evidence.
- Lock the period scope and confirm posting completeness.
- Check totals and accounts with reverse balances.
- Compare large movements and reconcile control accounts.
- Document adjusting entries and evidence, then rerun the balance.
From a balance to its transactions
The trial balance may still agree when a SAR 25,000 asset purchase is recorded as maintenance expense. The entry balances, but comparison with the prior month and invoice review reveal a classification that needs assessment and an approved correction.
A review order that saves time
Start with balances supported outside the ledger: banks, receivables, payables, inventory and assets. Then examine major period-on-period movements and balances that did not move when activity suggests they should. Unchanged depreciation after new equipment enters service may deserve more attention than a small fluctuation in a naturally variable expense.
Record a specific outcome: reconciled, explained difference or missing evidence. “Reviewed” alone does not identify the test or acceptance basis. An immaterial item may remain for follow-up under an agreed policy, but issuing the report should not make it disappear from the outstanding-items record.
Sources & further reading
Visit the original source to explore the concept and its wider context.
General educational content. Appropriate treatment depends on your business and accounting policies; consult your accounting professional when applying it to business records.
