Depending on what format you use to keep your general ledger, fixing an incorrect trial balance can be a quick, simple matter of changing a single number. If you use a handwritten ledger, don't use auto-update formulas or aren't exactly sure where you've made an error, fixing your document can take a bit more detective work. Using a few common tips for fixing this common accountant problem can help you keep more accurate books.
Step 1
Check to see if your ledger credit and debit columns balance. If they are equal, but the trial balance does not match your bank statement information, fixing your trial balance requires slightly different steps than if your credit and debit balances don't match.
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Step 2
Look at the starting trial balance for the last period you know was correct. For example, if you are performing a monthly reconciliation for your March transactions and the trial balance information in your ledger doesn't match the balance in your March bank statement, locate the ending trial balance in February. Review your February ledger reconciliation to determine that it was correct. Ending trial balances for months, quarters or years are often accompanied by some notation that the balance was reviewed and confirmed, such as a check mark or the initials of the bookkeeper.
Step 3
Find the starting trial balance of the period you believe contains the error. Review each debit transaction in the ledger and its accompanying credit transaction if you are correcting a ledger error that has caused an imbalance. Pay special attention to amounts, rather than descriptions, which can be entered incorrectly, contain transposed numbers or contain another error. For example, you might have recorded a $560 utilities transaction as $650, or as $56. Review each entry against your bank statement if you are fixing a reconciliation error to determine if you left a transaction off your March ledger or recorded a transaction incorrectly.
Step 4
Subtract or add the first erroneous amount you find to your incorrect trial balance to determine if this solves the problem. If it does not, you have more than one error. For example, if you believe your trial balance, which currently reads $5,670, should be $5,770 and you find a $100 math error, this solves your problem. If the first error you find is a $50 error, continue to look for more errors.
Step 5
Double-check your work if you do not find the error on your first pass. If you started from the top of the document to the bottom, start at the bottom and work your way back up. If you still do not find the error, count the total number of transactions in the ledger and compare it against the number of transactions in your bank statement. Determine if you are missing one or more transactions. Correct that problem, if it occurs, and check your new trial balance.
Step 6
Change any incorrect ledger entries in your document once you have found them and you have determined that your trial balance will be correct once you make the changes. Update the balance column after the first incorrect entry, and under each subsequent entry to update the running total column if you are not using a software program with an automatic update function. Your running total column will automatically update all the way down once you make any correction if you have your document set up with an auto update. Review your new trial balance once you have made your corrections to determine if it is correct.
Tip
Place your initials or the letters “Err/Adj” next to any corrections you make in a paper ledger to note that there was an error and an adjustment was made.
Warning
Don’t update your running total column until you have found all of your errors, or you might have to go back and do it again if you find another error.
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