What the list shows
Each account in the general ledger appears once with its closing balance, either as a debit or a credit. Assets and expenses normally carry debit balances. Liabilities, equity and revenue normally carry credit balances. Because every journal entry records equal debits and credits, the two columns should add up to the same total.
Accountants usually produce one before any adjustments and another after. The first is called unadjusted and the second adjusted, and the adjusted version is what the financial statements are built from.
Why balancing is not proof
A trial balance catches one kind of mistake: entries where debits and credits differ, or a balance carried across incorrectly. It cannot see an error that affects both sides equally. A $500 expense posted to the wrong account, an invoice recorded twice, or a purchase missing entirely will all leave the totals equal.
This is why a balanced trial balance is a starting point for review. It says the arithmetic holds together. It says nothing about whether the right transactions were recorded, in the right accounts, in the right period.
Adjusting entries before the statements
Some balances need correcting at period end even when nothing is wrong with the bookkeeping. Examples include accrued expenses, prepaid costs, amortization and unrecorded payroll. These are recorded as adjusting journal entries, and the trial balance is then rerun.
As an illustration, imagine the unadjusted columns each total $120,000 and an adjusting entry of $1,000 for an unpaid utility bill is recorded. Both columns rise to $121,000 and still agree. The statements now include a cost that the bank statement alone would never have shown.
What to review with your accountant
Look down the list for balances that look unusual: a negative cash account, a large amount in an uncategorized or suspense account, or a receivable that has not moved for months. Compare accounts such as cash and receivables against your bank statements and customer lists.
If the columns do not agree, the difference points to a posting problem rather than a business problem. Keep the trial balance for each year end with your working papers, since it ties the ledger to the statements prepared from it.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- Business recordsCanada Revenue Agency
- Where and how long to keep recordsCanada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.