Why the Trial Balance matches but the Balance Sheet is still wrong
1 min read
Updated 03 Oct 2026
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AI summary
Six kinds of errors that keep debits equal to credits, and how to catch them.
3 sections 6 steps
The short answer
A Trial Balance only checks that debits equal credits. Many mistakes post equal debits and credits to the wrong place, so the TB tallies while the accounts are wrong.
Errors the Trial Balance can't catch
| Error | Example | Effect |
|---|---|---|
| Omission | A purchase bill never entered | Purchases, creditors and ITC all understated |
| Commission (wrong person) | Payment to A posted to B | Both party balances wrong |
| Principle | Machinery purchase booked as Repairs expense | Profit understated, fixed assets understated |
| Compensating | Sales ₹1,000 short and rent ₹1,000 short | Two errors cancel out |
| Duplication | Same invoice entered twice | Sales, debtors and GST liability overstated |
| Wrong period / cut-off | March expense booked in April | Profit of both years wrong |
| Misclassification | Loan repayment posted as expense, GST paid posted to expense | Balance Sheet groups wrong |
| Wrong amount both sides | ₹9,800 entered as ₹8,900 in both ledgers | Amounts wrong everywhere |
How to catch them
- Reconcile bank, cash, GST (GSTR-2B, GSTR-1), TDS (26AS/AIS) and loans with outside statements.
- Confirm balances with major customers and suppliers.
- Scan ratios: sudden changes in GP %, expenses or debtor days point to misposting.
- Review odd balances: creditors with Dr balances, debtors with Cr balances, negative stock or cash.
- Check the Day Book for duplicates (same party, amount and date).
- Look at fixed asset additions and repairs together for errors of principle.
The AI Audit Log flags some of these (negative cash, high debtors). Reconciliation catches most of the rest.
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