Steps to Locate the Errors
If the trial balance does not tally, it means there are some errors in the books of accounts. The various steps which may be taken to locate the errors include the following:
1. Recheck the total of the Trial Balance and ascertain the exact amount difference in the Trial Balance.
2. Divide the difference of the Trial Balance by two and find out if there is any balance of the same amount in the Trial Balance. It may be that such a balance might have been recorded on the wrong side of the Trial Balance, thus causing a difference of double the amount.
3. If the mistake is not located by the above steps, the difference in the Trial Balance should be divided by 9. If the difference is evenly divisible by 9, the error may be due to transposition or transplacement of figures. A transposition occurs when 57 is written as 75, 197 as 791 and so on. A transplacement takes place when the digits of the numbers are moved to the left or right e.g. when Rs. 5,694 is written as Rs. 56.94 or s. 569.40. If there is a transposition or transplacement of figures, the search can be narrowed down to numbers where these errors might have been made.
4. See that the balances of all accounts including cash and bank balances have been included in the Trial Balance.
5. See that the opening balances have been correctly brought forward in the current year’s books.
6. If the difference is of a large amount, compare the Trial Balance of the current year with that of the previous year and see that the figures under similar head of account are approximately the same as those of the previous year and whether their balances fall on the same side of the Trial Balance. If the difference between the previous year figures and the current year figures is large one, establish the causes of difference.
7. If the above listed steps fail to detect the errors, check your work as follows:
(i) Check the totals of the subsidiary books paying particular attention to carry forwards.
(ii) Check the posting made from the Journal or subsidiary books in the ledger.
(iii) Re-check the balances extracted from ledger.
(iv) Re-cast the list of balances.
If all the efforts fail to locate the errors, all the books of primary entry (subsidiary books) must be cast, and, if necessary, the postings to the ledger should be re-checked.
|