When the trial balance indicates that the ledger is in balance, can you assume there are no errors in the ledger?
submitted by dedi

Arnold

This is a HUGE assumption. It is not a safe one though.

kellie

If a trial balance is in balance, it’s definitely a good sign that the ledger’s debits and credits are in agreement, but it's no guarantee that there aren't other errors. It's a good first sign, but you're not done.

The trial balance is a milestone along the way. It's great if it's on track, but keep going. Other milestones exist. You may have entered the wrong numbers on both sides. If you pull the wrong number off an invoice, for example, you'd enter that wrong number twice, so you'd still be in balance despite the error. You might accidentally transpose a number (writing 540 instead of 450). You might have a transaction posted to the wrong account too.

There's also the possibility that you're in balance, but you didn't enter everything that needed to be in that accounting period.

Dane

The trial balance is an important step, but it's not everything. It shouldn’t be mistaken for a guarantee that the ledger is all good. It's more like a quick health check, but not a deep dive.

You might be okay, but you run the risk of overlooking details. If you accidentally recorded a transaction twice, you'd be in balance still. If you forgot to enter a transaction at all, you'd still be in balance.

You may post the right amount, but put it in the wrong account. You'd still be in balance there too.