We know that the fundamental principle of Double Entry System id accounting is that for every debit, there must be a corresponding credit, thus, for every debit or a series of debits given to one or several accounts, there is a corresponding credit or a series of credit of n equal amount given to some other account or accounts and vice versa. It follows, therefore, that the sum total of debit accounts should equal the credit amounts of the ledger at any date. But if the various accounts in the ledger are balanced, then the total of all debit balance must be equal to the total of all credit balances if the books of accounts are arithmetically accurate.

Thus, at the end of the financial year o at any other time, the balances of all the ledger accounts are extracted and are written up in a statement known as Trial Balance and finally totaled up to see if the total of debit balances is equal to the total of credit balances. A Trail Balance may thus be defined as a statement of debit and credit totals or balance extracted from the various accounts in the ledger with a view to test the arithmetical accuracy of the books.

The agreement of the Trial Balance reveals that both the aspects of each transaction have been recorded and that the books are arithmetically accurate. If the Trial Balance does not agree, it shows that there are some errors which must be detected and rectified link between the ledger accounts and the final accounts.


The following are the main objectives of preparing the trial balance:

(i)      To have balances of all the accounts of the ledger in order to avoid the necessity of going through the pages of the ledger to find it out.

(ii)    To have a proof that the double entry of each transaction has been recorded because of its agreement.

(iii)   To have arithmetic accuracy of the books of accounts because of the agreement of the trial balance.

(iv)   To have material for preparing the profit and loss account and balance sheet of the business.


The following are the main limitations of the trial balance:

(i)     Trial balance can be prepared only in those concerns where double entry system of accounting is adopted. This system is very costly and cannot be adopted by the small concerns.

(ii)     Through trial balance gives arithmetic accuracy of the books of accounts but there are certain errors which are not disclosed by the trial balance. That is why it is said that trial balance is not a conclusive proof of the accuracy of the books of accounts.

(iii)If Trial Balance is not prepared correctly then the final accounts prepared will not reflect the true and fair view of the state of affairs of the business. Whatever conclusions and decisions are made by the various groups of persons will not be correct and will mislead such persons.