Trial Balance

#Trial balance structure

The trial balance lists:

• Account number and name: Each GL account
• Debit balance: If the account has a debit balance (assets, expenses, dividends)
• Credit balance: If the account has a credit balance (liabilities, equity, revenue)

Total debits must equal total credits. If they don't, errors in posting exist that must be corrected.

Example structure:

Account	Debit	Credit
Cash	50,000
Accounts Receivable	25,000
Accounts Payable		10,000
Revenue		100,000
Totals	75,000	110,000

In this example, debits (75,000) don't equal credits (110,000), indicating errors requiring investigation.

Good to know: A balanced trial balance doesn't guarantee accuracy. Errors like duplicate postings or posting to the wrong account won't be caught.

#Accessing the trial balance in Light

Generate your trial balance:

1. Navigate to Planning & Reports → Reports
2. Select as-of date (must be month-end or year-end)
3. Select entities to include (single entity or consolidated)
4. Select currency (transaction, local, or group)
5. Click Generate

Light displays the trial balance with all GL accounts and balances.

#Accounts with zero balances

By default, Light hides accounts with zero balances to reduce clutter. Toggle Show Zero Balances to see all accounts including those with no activity.

This is useful when:

• Confirming accounts are correctly configured
• Identifying departments with no activity
• Ensuring all required accounts are in the chart of accounts

#Finding trial balance errors

If your trial balance doesn't balance:

1. Check that all transactions have been posted (some may be pending)
2. Review recent transactions for duplicates or reversals
3. Check for unmatched inter-company transactions
4. Verify that all month-end accruals have been recorded
5. Look for unmatched bank reconciliations

Light provides a trial balance variance calculator:

1. Generate trial balance
2. Click Check for Errors
3. Light identifies common errors:
   • Unposted transactions
   • Duplicate postings
   • Accounts without matching double entries

#Trial balance by subsidiary

For multi-entity organizations:

1. Generate trial balance
2. Filter by Entity
3. View trial balance for each subsidiary separately
4. Each subsidiary's trial balance should balance

This helps identify which entity (if any) has posting errors.

#Trial balance by currency

View trial balance in different currencies:

1. Navigate to Planning & Reports → Reports
2. Select Currency: Transaction, Local, or Group
3. Light displays accounts in your selected currency

This is useful for:

• Verifying currency conversion accuracy
• Checking consolidated trial balance in group currency
• Analyzing foreign subsidiary results before consolidation

#Permanent accounts vs. temporary accounts

Trial balances distinguish between two types of accounts:

Permanent accounts (balance sheet accounts):

• Assets, liabilities, equity
• Balances carry forward to next period
• Appear on the balance sheet

Temporary accounts (income statement accounts):

• Revenue, expenses
• Balances reset at year-end
• Close to retained earnings

The trial balance includes both. At year-end, temporary accounts are closed to zero, and permanent accounts' balances carry forward to the next year.

#Preliminary vs. post-closing trial balance

Two versions exist:

Preliminary trial balance (unadjusted):

• Before month-end or year-end adjustments
• Includes both permanent and temporary accounts
• Used to identify needed adjustments

Post-closing trial balance (after closing):

• After temporary accounts are closed
• Includes only permanent (balance sheet) accounts
• Starting point for next period

Light can generate both versions.

#Trial balance and account reconciliation

Use the trial balance to plan account reconciliations:

1. Generate trial balance
2. For each material account, reconcile:
   • Trial balance amount
   • Supporting subledger (AP aging, AR aging, fixed assets)
   • Bank statements (for cash accounts)
3. Investigate reconciling items
4. Prepare reconciliation schedules

This ensures your trial balance is supported by detailed reconciliations.

#Trial balance and financial statement preparation

The trial balance is the foundation for preparing financial statements:

1. Generate trial balance
2. Classify accounts as balance sheet or P&L
3. Prepare balance sheet using permanent account balances
4. Prepare P&L using temporary account balances
5. Verify balance sheet and P&L totals

Light does this automatically, but understanding the connection is important.

#Trial balance trend analysis

Compare trial balances across periods:

1. Navigate to Planning & Reports → Reports
2. Select periods to compare (current month, prior month, prior year)
3. Light displays account balances side-by-side
4. Shows period-over-period changes
5. Highlights accounts with significant changes

Investigate large movements to understand business activity and identify errors.

#Account-level detail from trial balance

Drill into any trial balance account:

1. Click any account on the trial balance
2. Light shows all transactions posted to that account
3. Filter by date, description, or transaction type
4. Export transaction detail

This enables rapid error-finding and substantiation.

#Journal entry details

Verify that all trial balance accounts have corresponding journal entries:

1. Generate trial balance
2. For each account, review supporting journal entries
3. Verify amounts, dates, and descriptions match expected transactions
4. Identify if any entries are missing or duplicated

Light maintains a complete journal entry log, which feeds into the trial balance.

#Month-end and year-end procedures

At month and year-end, complete these procedures:

1. Post all transactions: Ensure no pending items exist
2. Bank reconciliation: Reconcile all bank accounts
3. Account reconciliation: Reconcile subledgers to GL
4. Accruals and reversals: Record month-end accruals, reverse prior-month accruals
5. Generate trial balance: Verify debits equal credits
6. Prepare financial statements: Balance sheet, P&L, cash flow
7. Review significant items: Document significant or unusual transactions
8. Sign off: Document that financial close is complete

Light supports all these procedures with built-in workflows.

#Trial balance export and analysis

Export trial balance for external auditors or further analysis:

1. Generate trial balance
2. Click Export
3. Select format: PDF, Excel, or CSV
4. Light generates output with all accounts and balances

External auditors typically request the trial balance to start their audit procedures.

Tip: Document your trial balance timing and reconciliation procedures in a month-end close checklist. This demonstrates strong financial controls.

#Related articles

• Reporting overview
• Balance sheet
• Profit and loss
• Custom reports and filters
• Audit-ready record keeping