What is a trial balance and what does it prove?

A trial balance is a list of every ledger balance in two columns: assets, expenses and drawings on the debit side, and liabilities, income and capital on the credit side. If the two column totals agree, the double entry is arithmetically correct and the figures can be used to prepare the financial statements. But agreement does not prove the books are free of errors, because some errors leave both totals unchanged.

Which errors are not revealed by a trial balance?

Six errors keep total debits equal to total credits, so the trial balance still agrees: omission (a transaction left out of both accounts), commission (right amount in the wrong account of the same type), principle (an item in the wrong type of account, such as an asset treated as an expense), original entry (a wrong figure used on both sides), reversal of entries (debit and credit swapped), and compensating errors (two mistakes that cancel out). The trial balance checks only the arithmetic.

What is a suspense account?

A suspense account is a temporary account opened to hold the difference when a trial balance does not agree and the error has not yet been found. It is opened on the shorter side so the totals balance for the time being. As each one-sided error is found, it is corrected by posting to the right account and to the suspense account, until the suspense balance is cleared to nil.

How do you correct errors that did not affect the trial balance?

Errors that left the trial balance agreeing are corrected with a normal two-sided journal entry, because both a debit and a credit need adjusting. You debit and credit equal amounts to move the figure from the wrong account to the right one. Because the totals were already equal, no suspense account is needed for these errors.

Why does a trial balance not prove the books are correct?

Because it only checks that total debits equal total credits, not that every entry went to the right place. The six errors not revealed by a trial balance (omission, commission, principle, original entry, reversal, and compensating errors) all keep the two totals equal, so the trial balance can agree even though real mistakes remain in the accounts.

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The trial balance and the correction of errors: N(A)-Level Principles of Accounts (SEAB 7086), covering preparing a trial balance, the errors not revealed by a trial balance, and correcting errors using the general journal and a suspense account

An N(A)-Level Principles of Accounts (SEAB 7086) overview of the trial balance and the correction of errors: how to prepare a trial balance from ledger balances and what it proves, the six errors that do not affect its agreement, and how to correct errors using the general journal and a suspense account.

Generated by Claude Opus 4.87 min readSEAB-7086Updated 2026-06-13

Reviewed by: AI editorial process; not yet individually human-reviewed

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What this module trains
Preparing the trial balance
The errors a trial balance cannot catch
Correcting errors and the suspense account
Check your knowledge

What this module trains

After the ledger has been written up, the trial balance is the first check that the double entry adds up, and the springboard for the financial statements. N(A)-Level Principles of Accounts (SEAB 7086) tests both halves of this story: preparing a tidy trial balance, and putting right the errors that creep in, including the ones a trial balance cannot catch. This module shows you how to build the trial balance, recognise each type of error, and correct it with the general journal and, where needed, a suspense account.

This guide links the three dot points of the module, each with its own page and practice, and connects back to the double entry system it checks. The subject hub is at /sg-n-level/accounting and the syllabus index at /sg-n-level/accounting/syllabus.

Preparing the trial balance

The preparing the trial balance dot point shows how to list every ledger balance in the right column and total them. Assets, expenses and drawings carry debit balances; liabilities, income and capital carry credit balances. If the columns agree, the arithmetic is sound; if they do not, there is an error to find.

The errors a trial balance cannot catch

The errors not revealed by the trial balance dot point lists the six errors that keep total debits equal to total credits: omission, commission, principle, original entry, reversal of entries, and compensating errors. Because each one leaves the two totals equal, the trial balance still agrees even though a real mistake remains, which is why agreement does not prove the books are correct.

Correcting errors and the suspense account

The correcting errors and the suspense account dot point shows the two cases: two-sided errors corrected by a normal journal entry, and one-sided errors corrected through a suspense account that holds the difference until every error is found.

Using a suspense account to clear a difference

step 1: open the suspense account

The trial balance debit total is $\text{S\textdollar}50{,}000$ and the credit total is $\text{S\textdollar}49{,}820$ , a difference of $\text{S\textdollar}180$ . The credit side is short, so open a suspense account with a credit balance of $\text{S\textdollar}180$ to make the totals agree for now.

step 2: find the first error

Rent paid of $\text{S\textdollar}100$ was debited to the rent account but not posted to the cash book, a one-sided error. The credit side of the books is short by $\text{S\textdollar}100$ .

step 3: correct the first error

Credit bank $\text{S\textdollar}100$ and debit suspense $\text{S\textdollar}100$ . The suspense balance falls from $\text{S\textdollar}180$ credit to $\text{S\textdollar}80$ credit.

step 4: find and clear the rest

Discount received of $\text{S\textdollar}80$ was credited to the discount account but the other side was omitted, leaving the credit side short by another $\text{S\textdollar}80$ . Credit suspense $\text{S\textdollar}80$ and debit the relevant account, clearing the suspense balance to nil. Once suspense is zero, every one-sided error has been found.

The trial balance and the correction of errors are core technique in N(A)-Level Principles of Accounts (SEAB 7086). A trial balance lists every ledger balance in two columns, debit (assets, expenses, drawings) and credit (liabilities, income, capital); if the totals agree, the arithmetic is sound and the financial statements can follow. But agreement does not prove correctness, because six errors keep the totals equal: omission, commission, principle, original entry, reversal of entries, and compensating errors. Two-sided errors are corrected by a normal journal entry. When the trial balance does not agree, a suspense account temporarily holds the difference, opened on the short side, and each one-sided error is corrected by posting to the right account and to suspense until the suspense balance is cleared to nil.

Check your knowledge

A mix of recall and application questions across the module. Work each fully, then check against the solutions.

State, with a reason, which side a trial balance shows the capital account on. (2 marks)
Name three errors that do not affect the agreement of a trial balance. (3 marks)
A purchase of equipment was recorded in the purchases account. Name this type of error and explain why the trial balance still agrees. (3 marks)
The trial balance credit total is $\text{S\textdollar}200$ less than the debit total. State the balance needed in the suspense account and on which side. (2 marks)
Explain why a trial balance that agrees does not prove the books are free of errors. (2 marks)
Give the journal entry to correct discount allowed of $\text{S\textdollar}50$ that was credited to discount allowed instead of debited. (3 marks)

Solutions

Q1: The credit side. Capital is owner's equity, and under DEAD CLIC capital (the C in CLIC) increases on the credit side, so it carries a credit balance.
Q2: Any three of: omission, commission, principle, original entry, reversal of entries, compensating errors.
Q3: This is an error of principle: equipment (an asset) was treated as purchases (an expense), the wrong type of account. The trial balance still agrees because the debit was simply made to the wrong account; total debits and total credits are unchanged.
Q4: A suspense account with a credit balance of $\text{S\textdollar}200$ , because the credit side is short and the suspense balance is opened on the shorter side to make the totals agree.
Q5: Because a trial balance only checks that total debits equal total credits. The six errors not revealed by a trial balance all keep the totals equal, so the books can contain real mistakes even when the columns agree.
Q6: The amount was credited where it should have been debited, so it is wrong by $2 \times \text{S\textdollar}50 = \text{S\textdollar}100$ . Debit discount allowed $\text{S\textdollar}100$ and credit suspense $\text{S\textdollar}100$ , which both removes the wrong credit of $\text{S\textdollar}50$ and records the correct debit of $\text{S\textdollar}50$ .

Sources & how we know this

Principles of Accounts (Syllabus 7086) — Singapore Examinations and Assessment Board (2026)