{"id":"concept:trial-balance","kind":"concept","label":"Trial Balance","synonyms":["TB"],"definition":"A trial balance lists every account with a nonzero balance across all five account types, split into debit and credit columns, and proves that total debits equal total credits.","summary":"Not a financial statement — a mechanical integrity check. It lists every account with activity, assets through expenses on one list, and its debit and credit totals must match exactly. In BalanceMCP that's close to structurally guaranteed, since every entry is balance-checked before it's ever stored.","explanation":["A trial balance is a list of every account with its balance at a moment, and the total of the debit balances beside the total of the credit balances. Its purpose is the comparison: if the two totals differ, something is structurally wrong with the records themselves.","In a system where entries are validated on the way in, that comparison is close to a formality — an unbalanced entry cannot be stored, so the totals agree by construction. It remains useful for the other thing it shows, which is every account at once, including the ones a profit and loss statement and a balance sheet each leave out.","Its limitation is the one worth remembering: a trial balance proves the arithmetic, never the meaning. A payment recorded to the wrong expense account balances exactly as well as one recorded correctly, and no total anywhere will indicate otherwise.","It is not a financial statement. Nobody sends a trial balance to a lender; it is an internal check, and it is the first thing to run when something seems off."],"commonMistakes":["Treating a balanced trial balance as proof every transaction is correctly categorized — it only proves total debits equal total credits, not that the right accounts were used.","Confusing a trial balance (a health check, all five account types) with a balance sheet (a financial statement, only three types).","Trying to \"fix\" a false balanced flag by re-categorizing transactions — it points to a structural database issue, worth reporting rather than working around."],"category":"statements","questions":[{"question":"If my trial balance balances, does that mean my books are correct?","answer":"It means the arithmetic is correct — every debit has a matching credit. It doesn't mean every transaction landed in the right account; a miscategorized entry balances just as perfectly as a correct one."},{"question":"Why does my trial balance show accounts my balance sheet doesn't?","answer":"A trial balance includes income and expense accounts alongside assets, liabilities, and equity — all five types. A balance sheet only shows three directly, folding income and expense into Retained Earnings instead."}],"url":"/glossary/trial-balance","relatedTo":[{"id":"concept:general-ledger","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Ageneral-ledger"},{"id":"concept:balance-sheet","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Abalance-sheet"},{"id":"concept:double-entry-bookkeeping","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Adouble-entry-bookkeeping"},{"id":"concept:normal-balance","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Anormal-balance"},{"id":"concept:reconciliation-difference","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Areconciliation-difference"},{"id":"guide:trial-balance-vs-balance-sheet","relationship":"references","weight":0.7,"api":"/api/knowledge/guide%3Atrial-balance-vs-balance-sheet"},{"id":"tool:trial_balance","relationship":"references","weight":0.7,"api":"/api/knowledge/tool%3Atrial_balance"}],"referencedBy":[{"id":"concept:general-ledger","label":"General Ledger","url":"/glossary/general-ledger"},{"id":"concept:balance-sheet","label":"Balance Sheet","url":"/glossary/balance-sheet"},{"id":"guide:trial-balance-vs-balance-sheet","label":"Trial Balance vs. Balance Sheet: They're Not the Same Report","url":"/guides/trial-balance-vs-balance-sheet"},{"id":"guide:what-to-do-when-your-books-dont-balance","label":"What to Do When Your Books Don't Balance","url":"/guides/what-to-do-when-your-books-dont-balance"},{"id":"tool:trial_balance","label":"See every account balance in one place, and confirm the books actually balance","url":"/tools/trial_balance"}],"license":"https://creativecommons.org/licenses/by/4.0/","attribution":"BalanceMCP — https://balancemcp.com"}