A difference of 270
David Clarke has run a hardware shop for eleven years and keeps the books himself, in a spreadsheet he knows by heart. It is the last day of the month. He adds up the debit column: 48,620. He adds up the credit column: 48,350. There are 270 missing, and he has no idea where.
He checks the entries of the first week, then the second. By eleven at night he has gone through two hundred transactions and the difference is still there, untouched, like a stone in his shoe. Then he remembers something an accounting teacher told him years ago: before you search, do some arithmetic with the difference.
What a trial balance catches and what it does not
The trial balance compares the total of all debit balances with the total of all credit balances. If they differ, there is certainly an error. But if they match, that does not prove there is none.
| The trial balance catches | The trial balance does not catch |
|---|---|
| An entry whose debits and credits differ | An entry that was never recorded |
| An amount posted to the ledger on one side only | An entry recorded twice |
| A wrong total | An amount in the wrong account, on the right side |
| A figure written differently on the debit and the credit side | The same wrong amount on both sides |
Five clues for finding the difference
- Add it up again. It sounds obvious, but the error is in the total more often than you would think.
- Look for the exact difference. An amount equal to the difference is often a missing line: an entry with its debit and no credit.
- Divide by two. If a figure went on the wrong side, the difference is twice that figure. With 270, look for a 135.
- Divide by nine. If the difference divides by 9 with nothing left over, suspect two swapped digits (4,350 written as 4,530 leaves 180) or a shifted decimal point (300 written as 30 leaves 270).
- Compare with last month. An account whose balance moved far more than usual is a good place to start.
David's error
David divides 270 by 2: 135. There is no 135 anywhere. He divides 270 by 9: exactly 30. So he looks for a 30 that should have been 300, or a 300 that should have been 30. He finds it in two minutes: a purchase of screws for 300 dollars, debited to inventory as 300 and credited to cash as 30. A zero that stayed on the keyboard.
That night David learns two things. First, arithmetic finds in minutes what the eye cannot find in hours. Second, the error should never have got in: an entry with 300 on the debit side and 30 on the credit side does not balance, and a double-entry system would have refused it on the spot.
The errors a trial balance cannot see
The following month David keeps his books in a system that refuses unbalanced entries, and his trial balance always balances. That does not make it infallible. For errors that do not change the totals, these checks work:
- Reconcile the bank every month: an omitted or duplicated entry usually shows up as a difference with the bank statement.
- Check normal balances: a cash account with a credit balance or an expense with a credit balance is impossible and points to a wrong side or a wrong account.
- Compare each account with the same month last year and ask about every big jump.
- Count the stock and compare it with what the books say.
That is how David found his second error: the shop's rent, 1,000 dollars, recorded in the electricity account. The trial balance balanced, but the month's power bill looked like a factory's.
How to correct an entry without erasing anything
A posted entry is not deleted or overwritten. It is corrected with a reversal, which is the same entry with the sides swapped, and then the right entry is recorded. All three stay in the journal book and anyone can follow what happened.
| Entry | Debit | Credit | Amount |
|---|---|---|---|
| Original, wrong | Electricity | Cash | 1,000 |
| Reversal | Cash | Electricity | 1,000 |
| Correct entry | Rent expense | Cash | 1,000 |
Erasing would have been quicker, but a book that can be erased is a book nobody can trust: not the accountant, not the bank, and not you a year from now.
Where Aconta Online comes in
Aconta Online refuses any entry whose debits and credits do not match, so the difference of 270 never comes to exist. It never edits a posted entry: it cancels it with a reversal and keeps both, with the date and the person behind each. The trial balance is always up to date, and the glossary explains the normal balance of each type of account so you can spot at a glance what does not fit. The first company is free, no card required.
Questions
Why does my trial balance not balance?
Almost always because of an entry whose debits and credits differ, an amount posted to the ledger on one side only, or a wrong total. Divide the difference by 2 and by 9 to narrow the search.
What does it mean when the difference divides by 9?
That there are probably two swapped digits, such as 54 written as 45, or a shifted decimal point, such as 300 written as 30. Both leave a difference that is a multiple of 9.
Can a wrong journal entry be deleted?
It should not be deleted. Record a reversal with the sides swapped and then the correct entry, so the whole history stays in the journal book.
If the trial balance balances, are my books right?
Not necessarily. The trial balance does not see an omitted entry, a duplicated one or an amount in the wrong account. Bank reconciliation, a review of balances and a stock count are there for that.