The balance sheet is one type of financial report that must be made by entrepreneurs or business entities. Does the trial balance have to be balanced and if it doesn’t balance what should you do?
As we know, the trial balance must be balanced, where the account balance on the debit side (assets) must equal the account balance on the credit side (liabilities).
If the trial balance is not balanced, it means that there is a recording error.
It should also be remembered that a balanced balance is not necessarily correct, but a correct balance must be balanced.
Causes of Unbalanced Balance
An unbalanced balance sheet is usually the result of an error. The following are some of the errors that may occur:
The initial balance is out of balance
The beginning balance is an important factor in the balance of the trial balance or not.
If the balance is wrong from the start, then you can be sure that the trial balance cannot be balanced.
Therefore, it is necessary to check the amount of the initial balance.
How to check it is quite easy, namely by adding up all the assets owned and then comparing it with all the total liabilities plus capital, if the results are balanced then you can continue.
Error preparing a trial balance
Errors referred to here such as, incorrectly adding up the balance, writing the wrong number, or incorrectly recording the debit and credit accounts (switched).
It’s also possible that you made a mistake in classifying your account. For example, you enter cash in the liability section, even though cash should be included in the asset classification.
The solution is to be more careful in writing the transaction nominal, if necessary, and check again to make sure that everything is correct.
The second type of error is a miscalculation of estimates. Before making a fixed, correct, and fixed trial balance, the amount on the balance sheet is an approximate amount.
This is because usually there are still adjustments made by the company.
An unbalanced trial balance usually also occurs because you have miscalculated estimates.
When you feel that your writing and posting are correct but still not balanced, then you can try to add up again more carefully, usually, something is left or wrong in writing the numbers.
Error in a journal entry
The second error is wrong in recording the journal.
For example, if you record an amount on a debit of IDR 75,000 and a credit of IDR 85,000, there will be a difference of IDR 10,000 which can cause the trial balance to be unbalanced.
The solution is to re-check each number writing.
Wrong posting in the ledger
Errors that may and often occur if the balance sheet is not balanced are incorrectly posting accounts in the general ledger.
For example, the account should be included in the asset account group in the general ledger but when posting it is included in the liability group (eg receivables to payables, or vice versa).
This error can be solved by re-matching every transaction that occurs after it has been written to the general ledger.
How to Review an Unbalanced Trial
After you know the reason why the trial balance is not balanced, then you need and must immediately conduct a review.
Because, if you don’t review it right away and fix it, it will have an impact on the company’s overall financial statements.
The accounting process will be interrupted until errors are found and you make adjustments or corrections to those errors.
There are several ways that can be done to detect errors in the trial balance that cause unbalance, as for the method as follows:
- If an error occurs in the number of units such as Rp. 50,000, Rp. 500,000, or Rp. 5,000,000, then you must calculate and re-check the debit credit section.
- If there is an error in the debit or credit section, then find the difference between the debits and then divide it into two, check the trial balance, and find transactions that are equal to half of the difference between the two quotients.
- If the value of the balance can be divided into nine, then check on the trial balance whether there is an error in writing in the ledger. The error that is often encountered is usually the writing of Rp. 117,000, which is written as Rp. 171,000.
- If the difference cannot be divided by nine or divided by two, then check the general ledger and proof of the transaction whether there is a typo or not.
- Compare the names of the accounts in the trial balance and the general ledger, also make sure that all the accounts in the general ledger are entered in the trial balance correctly.
- Make sure the sum of the debit and credit balances and the difference in each general ledger account.
Prevention for Balanced Balance
Carrying out the accounting process, especially recording requires a high level of accuracy.
Just a little bit will affect the next steps. Performing account analysis of transactions, checking postings, and ensuring correct numbers can reduce the occurrence of errors.
In order for the balance to be balanced, what must be done is to take several preventive steps.
There are several preventive steps that you can take, namely in the following ways:
- Conduct a more thorough analysis of the elements that influence the transaction process such as assets, debts, costs, income, and capital.
- Perform an analysis of the related elements, whether the transaction can add or subtract from these elements.
- Perform an analysis on the debit and credit sections that have been carried out, whether there are additional certain elements that must be entered on the debit or credit side.
- Make comparisons between the numbers that have been posted with the numbers on proof of payments, accounts, and the like.
- Re-examine all similarities between the debit and credit sections with the entire record in the journal.
- Write in order according to the account number.
- Write in order based on the date the transaction occurred.
- Do a check on the writing of numbers, especially on the dot and comma.
Overcome an Unbalanced Balance with the Help of Mekari Journal Accounting Software
Calculating a trial balance so that it is balanced is not easy, especially if the transactions that occur every month are in the thousands, then you will find it difficult to calculate them.
Journals are online accounting software that can help you create a trial balance easily with accurate results and can be presented in real time .
You only need to enter all financial transactions into the system, and the Journal will process it into a trial balance and other financial statements according to your needs.
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Does the trial balance have to be balanced? Of course yes. If an error occurs that causes the trial balance to be unbalanced, then you can review it again in the way above.
By reading the explanation above, hopefully, you can answer the following questions:
- One of the factors that can be used as a comparison in working on a worksheet is correct and appropriate.
- In order for the balance sheet to be balanced what must be done?
- The trial balance will not be balanced if what happens?
- Explain what to do when filling different income accounts?
- The debit balance in which account indicates a possible error?
Hopefully, the information above helps. Follow Jurnal by Mekari’s social media for more information about the business, finance, and accounting.