What is the list of debit and credit items in Trial Balance?(Rules,Examples)

 Are you excited to know the list of debit items and credit items in Trial Balance with an example? Let's dive into it. See how it works with rules in simple terms. 

What is Trial Balance in accounting?

Trial Balance is a statement that is prepared to ensure the arithmetical accuracy of books of accounts. It is a statement, not an account. It is prepared on a particular date to ensure the arithmetical accuracy of books of accounts i.e., to check that all accounts adhere to the Generally Acceptable Accounting Principles and there are no clerical errors exist in books of accounts.

It has all the ledger accounts having debit and credit balances. It has a debit balance and credit balance columns which are equal in amount and tallies. If both the credit and debit columns are equal in amount and tallies then it represents that there are no errors and ensures arithmetical accuracy of books of accounts. The difference amount in the Trial Balance, when debit & credit balance does not tally, will be transferred to the suspense account. When these errors are rectified, then the suspense account is closed by passing an adjustment entry. 

What is the list of debit and credit items in the trial balance with rules?

Trial balance gives the list of ledger account balances. These ledger accounts may have a debit balance or credit balance based on the nature of the account. 

These ledger accounts are classified as Assets, Liabilities, Equity/Capital, Expenses & Incomes

Here, the simple rule is expalined below for the same.

1. All the Assets, Investments, Expenses/Losses have a Debit Balance.

2. All Incomes,Gains, Liabilities, and Capital/Equity have a Credit balance

The list of Debit items in the Trial balance

Here, we have the list of items/accounts that have a debit balance in the trial balance. Generally, Assets and Expenses/Losses have a debit balance

1. Land and Building

"Land and Building" is placed on the debit side of the trial balance because it is a tangible fixed asset owned by the business. Land and Building is a non current asset for the business.

An asset is a resource of value owned by a business or individual that provides monetary or economic benefits. In accounting terms, assets are resources that generates revenue for the business entity.

2. Plant & Machinery

Plant & Machinery refers to large, durable equipment and machines used in the production process or business operations, such as manufacturing machines or factory equipment. These are considered fixed assets, as they have a long-term value and contribute to production.

3. Furniture & fixtures

Furniture and fixtures refer to movable items like desks, chairs, and lighting fixtures used in the business for operations. These are fixed assets, as they provide long-term value to the business.

4. Office Tools & Equipments

Office Tools & Equipment refers to items like computers, printers, telephones, and other devices used in the day-to-day operations of the business. These are considered fixed assets, as they are used over a long period to support business functions.. 

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5. Vehicles or Motor Vans

Vehicles or Motor Vans refer to automobiles used by the business for transportation purposes, such as delivering goods or employee travel. These are fixed assets, as they provide long-term utility to the business.

6. Goodwill

Goodwill refers to the value of a business's reputation, customer relationships, and brand that contributes to its profitability. it is recorded when a business is acquired for more than its fair value. it is a intangible fixed asset for the business entity

5. Patents 

Patents refer to exclusive legal rights granted to a business or individual for a specific invention or process, preventing others from making, using, or selling it. They are intangible assets, as they have long-term value and contribute to a business's competitive advantage.

6. Trademarks 

Trademarks refer to distinctive symbols, logos, words, or other identifiers used to distinguish a company's products or services from others. They are intangible assets as they provide long-term value through brand recognition and protection.

7. Copywrites

Copyrights refer to the exclusive legal rights granted to the creator of original works, such as books, music, or software, allowing them to control reproduction and distribution. They are intangible assets, as they provide long-term value and protection to creative works.

8. Investments

"Investments" is placed on the debit side of the trial balance because it is an asset for the business entity

Investments (such as stocks, bonds, or other securities) are resources owned by the business with the intention of earning income or appreciation over time.

9. Cash in hand

Cash in hand refers to the physical money (coins and currency notes) that a business or individual has readily available at a given time. It is a current asset, as it is owned and controlled by the business.

10. Sundry Debtors

Sundry Debtors are individuals or entities who owe money to the business for goods sold or services provided on credit. It is a current asset, as it represents amounts receivable in the future.

11. Accounts Receivable, Bills receivables

Accounts Receivable refers to amounts owed to the business by customers for goods or services sold on credit. It is a current asset, representing future inflows of cash.

Bills Receivable are promissory notes or written agreements where customers promise to pay a specific amount on a future date. It ensures legal assurance of payment

12. Prepaid expenses

 Payments made in advance for services or benefits to be received in the future. 

13. Purchases

The cost of goods bought for resale or production purposes. It is recorded as an expense.

14. Direct expenses (wages, factory expenses)

Expenses directly related to production, like wages or factory costs. They are recorded as operational costs

15. Opening Stock

The value of inventory available at the start of the accounting period. It is recorded as part of the cost of goods sold.

16. Selling & Advertisement Expenses

Costs incurred for promoting and selling products or services. These are recorded as operational expenses

17. Bad Debts

Amounts that cannot be collected from debtors and are written off. It is treated as an expense

18. Depreciation

A reduction in the value of fixed assets over time due to use or obsolescence. It is an expense 

19. Commission paid

Payments made to agents or intermediaries for services provided. It is recorded as an expense 

20. Discount Allowed

The reduction given to customers for early payment of dues.  It is treated as an expense

21. Rent paid

Payments made for renting property or equipment. It is treated as an expense, an operating expense.

22. Salary paid

Payments made to employees for their services.  It is treated as an expense

23. Bank charges

Fees charged by banks for services like account maintenance.  It is treated as an expense

24. Printing & stationery charges

Costs of office supplies like paper, pens, and printing. It is an operating expense recorded

25. Insurance charges

Fees or commission charged by Insurance companies for services rendered.  It is treated as an expense

26. Interest paid

The cost of borrowing funds, such as on loans. It is recorded as an expense

27. Legal expenses

Costs incurred for legal consultations or litigation. It is recorded as an operating expense

28. Loss on sale of machinery/equipments

The shortfall when selling machinery or equipment below its book value. It is recorded as an expense

29. Travelling/conveyance charges

Expenses incurred for travel or transportation.  It is treated as an expense

30. Cash at bank

The balance of cash held in bank accounts. It is a current asset recorded therein

31. Accounts Receivable

Amounts owed to the business by customers for credit sales. It is a current asset recorded therein

32. Inventory (Stock)

Goods available for sale or production. It is a current asset recorded therein

33. Prepaid Expenses

Payments made in advance for services or benefits to be received in the future. It is a current asset recorded therein

34. Office Supplies

Consumables like pens and paper used in day-to-day operations.  It is treated as an expense

35. Machinery

Tangible assets used for production or operations. It is a fixed asset recorded therein

36. Equipment

Assets like tools and devices used in business operations. It is a fixed asset recorded therein

37. Vehicles

Automobiles owned by the business for transportation. It is a fixed asset recorded therein

38. Capital Work in Progress

Expenses incurred on assets under construction. It is a non-current asset recorded therein

39. Investments (Short-term)

Investments expected to be sold within a year. It is a current asset recorded therein

40. Investments (Long-term)

Investments held for more than a year for long-term benefits. It is a non-current asset recorded therein

41. Loans and Advances (Assets)

Amounts given to employees or others as loans or advances. It is a current asset recorded therein

42. Rent Paid

Payments made for renting property or equipment. It is recorded as an operating expense.

43. Salaries Paid

Payments made to employees for their services. It is an expense recorded therein

44. Wages

Payments to laborers directly involved in production. It is an expense recorded therein.

45. Advertising Expenses

Costs incurred for promoting and selling products or services. These are recorded as operational expenses.

46. Travel Expenses

Expenses incurred for travel or transportation. It is treated as an expense

47. Utilities Expense

Costs for electricity, water, and other utilities. It is an operating expense recorded therein

48. Insurance Expense

Payments for insurance policies to protect assets or operations. It is an expense recorded therein

49. Interest Paid

The cost of borrowing funds, such as on loans.  It is treated as an expense

50. Legal Expenses

Costs incurred for legal consultations or litigation. It is recorded as an operating expense .

51. Repair and Maintenance

Costs for maintaining and repairing assets. It is treated as an expense

52. Depreciation (Asset)

A reduction in the value of fixed assets over time due to use or obsolescence.  It is treated as an expense

53. Loss on Sale of Assets

The shortfall when selling an asset for less than its book value. It is a loss recorded therein.

54. Bad Debts

Amounts that cannot be recovered from debtors. It is recognised as loss.

55. Amortization Expense

The allocation of the cost of intangible assets over their useful life.  It is treated as an expense

56. Freight Inward

Transportation costs for bringing goods into the business. It is a direct expense recorded therein

57. Discount Allowed

The reduction given to customers for early payment of dues.  It is treated as an expense

58. Research and Development Expenses

Costs incurred for developing new products or improving existing ones.  It is treated as an expense

59. Purchase Account

The cost of goods bought for resale or production purposes. It is recorded as an expense.

60. Raw Materials

Cost of materials used in the production process. It is a current asset recorded therein

61. Work in Progress (WIP)

Partially finished goods in the production process. It is a current asset recorded therein

62. Finished Goods

Completed goods ready for sale. It is a current asset recorded therein

63. Preliminary Expenses

Expenses incurred during the formation of a company. It is a deferred expense recorded therein

64. Staff Welfare Expenses

Costs incurred for employee well-being, such as health benefits or recreational activities.  It is treated as an expense

65. Stationery Expenses

Costs of office supplies like paper, pens, and printing.  It is treated as an expense.

66. Entertainment Expenses

Costs incurred for hosting or entertaining clients or employees.  It is treated as an expense

67. Training Expenses

Costs incurred for employee skill development or training.  It is treated as an expense

68. Leasehold Improvements

Costs of modifications or improvements to leased property. It is a fixed asset recorded therein

69. Bank Charges

Fees charged by banks for services like account maintenance.  It is treated as an expense

70. IT Expenses

Costs incurred for information technology, including software and hardware. It is treated as an expense

71. Professional Fees Paid

Payments made for professional services like auditors, consultants, or legal advisors.  It is treated as an expense

The list of Credit items in the Trial balance

Here, we have the list of items/accounts that have a credit balance in the trial balance. Generally, Capital, Reserves, Liabilities and Incomes have credit balance in trial balance

1.Capital Account

Capital Account refers to the account that represents the owner's investment in the business. It shows the initial and any additional capital invested, along with retained earnings or profits, and is recorded on the credit side of the trial balance as it represents equity in the business.

2.Accounts Payable

Accounts Payable refers to the amounts a business owes to suppliers or creditors for goods or services received on credit. It is a current liability as it represents an obligation to pay in the future.

3.Bank Overdraft

Bank Overdraft refers to a situation where a business withdraws more money from its bank account than the available balance, creating a liability. It is a current liability recorded on the credit side of the trial balance, as it represents an amount the business owes to the bank.

4.Loans (Short-term)

Loans (Short-term) refer to borrowings that a business must repay within a year. They are classified as current liabilities, as they represent amounts the business owes in the short term.

5.Loans (Long-term)

Loans (Long-term) refer to borrowings that a business must repay over a period longer than one year. They are classified as non-current liabilities, as they represent amounts the business owes for the long term.

6.Unearned Revenue

Unearned Revenue is money a business receives before providing goods or services to the customer. It's also called "deferred revenue." Since the business hasn’t earned this money yet, it’s considered a liability.

Once the service is provided, the amount is moved from Unearned Revenue to a revenue account.

7.Accrued Expenses

Accrued Expenses are costs that a company has incurred but hasn’t yet paid. These are expenses recognized in the accounting period in which they occur, even if the payment happens later.

For example:

• Salaries earned by employees but not yet paid at the end of the month.
• Utility bills used but not yet invoiced or paid.

8.Rent Received

Rent Received refers to money earned by a business or individual for renting out property, such as a building, office, or equipment, to someone else.

For example:

• If a business rents out a portion of its office space and receives $1,000, this amount is categorized as Rent Received and credited in the books.

9.Interest Received

Interest Received is the income earned by a business or individual for lending money or from investments, such as savings accounts, bonds, or fixed deposits.

For example:

• If a company earns $500 as interest on a bank deposit, it is classified as Interest Received and credited in the accounts.

10.Discount Received

Discount Received refers to a reduction in the amount owed to a supplier, typically offered for early payment or bulk purchases. It is considered a type of income because it reduces the business's expenses.

For example:

• If a business owes $1,000 to a supplier but gets a $50 discount for early payment, that $50 is recorded as Discount Received and credited in the books.

11.Sales Account

The Sales Account records the revenue earned from selling goods or services during an accounting period. It reflects the total income generated by a business through its core operations.

For example:

• If a business sells products worth $10,000, this amount is credited to the Sales Account in the books.

Sales revenue is a key component in calculating a company's gross profit and overall financial performance.

12. Commission Received

Commission Received is income earned by a business or individual for acting as an agent or intermediary in a transaction. It is typically a fee or percentage of the value of the transaction facilitated.

13. Dividends Received

Dividends Received refer to income earned by a business or individual from investments in shares of other companies. It represents the portion of a company’s profits distributed to shareholders.

14. Royalties Received

Royalties are a form of income earned by a business or individual for granting others the right to use their intellectual property, such as patents, trademarks, copyrights, or other proprietary assets.

15. Provision for Doubtful Debts

The Provision for Doubtful Debts appears on the credit side of the trial balance, as it represents an estimate of amounts that will not be collectible and effectively reduces the overall amount of receivables. It is a liability from an accounting perspective, as it reflects an anticipated future expense (bad debts).

It’s generally shown as a liability item or as a deduction from Accounts Receivable in the balance sheet.

16. Accumulated Depreciation

It reflects the total depreciation charged on a fixed asset since its purchase, reducing the asset’s book value on the balance sheet. The depreciation expense is recorded in the income statement and impacts the net profit. Over time, as assets depreciate, the accumulated depreciation increases, reflecting the asset’s decreasing value.

17. Trade Payables

Trade Payables are amounts a company owes to suppliers or vendors for goods and services purchased on credit. They are considered short-term liabilities. Trade payables are usually settled within a specified period, such as 30, 60, or 90 days. They are important for managing a company's cash flow and maintaining supplier relationships.

18. Retained Earnings

Retained Earnings represent the portion of a company's profits that are kept (retained) and not distributed to shareholders as dividends. They accumulate over time, increasing with net income and decreasing with dividends paid. Retained earnings are a part of equity on the balance sheet. This account reflects the company's ability to reinvest profits into business operations or pay off debts, supporting its growth and financial stability

19. Outstanding Salaries

Outstanding Salaries refer to salaries that a company owes to its employees but has not yet paid. Outstanding salaries are typically short-term liabilities, as they are expected to be paid within a short period, such as the end of the payroll cycle. This account helps ensure that the company accurately reflects its financial obligations regarding employee compensation in its balance sheet.

20. Outstanding Rent

Outstanding Rent refers to rent expenses that a company has incurred but has not yet paid. It is classified as a liability because it represents an amount the company owes to the landlord or property owner. It reflects the company’s obligation to make the payment in the near future, typically within the next accounting period or as per the agreed-upon terms with the landlord.

21. Outstanding Utilities

Outstanding Utilities refer to utility bills (such as electricity, water, gas, etc.) that a company has incurred but has not yet paid. These are considered current liabilities as they are amounts owed to service providers that will typically be paid within a short period. This account reflects the company’s obligation to settle its utility bills in the near future, ensuring accurate reporting of financial obligations.

22. Unearned Income

Unearned Income refers to money a company receives in advance for goods or services that are yet to be delivered or performed. It is considered a liability because the company has an obligation to provide the goods or services in the future. In the trial balance, unearned income appears on the credit side under current liabilities or non-current liabilities, depending on when the income is expected to be earned. Once the goods or services are provided, the income is recognized as revenue in the financial statements.

23. Provision for Taxes

Provision for Taxes is an accounting entry that represents an estimate of the taxes a company expects to pay based on its income or profit for the current period. It is recorded as a liability because it reflects the company's obligation to pay taxes to the authorities in the near future. The actual tax amount is paid once the tax return is filed, at which point the provision is adjusted or cleared.

24. Share Premium

Share Premium refers to the amount received by a company from shareholders over and above the nominal (par) value of its shares. When a company issues shares at a price higher than their face value, the excess amount is recorded as share premium in the equity section of the balance sheet.

 This amount is not distributable as dividends but can be used for purposes such as issuing bonus shares or paying off certain liabilities, as per the company's legal and regulatory guidelines

25. Bonds Payable

Bonds Payable represent a company's long-term debt issued through bonds. When a company borrows money by issuing bonds, it agrees to pay bondholders interest over the life of the bonds and to repay the principal amount at maturity.

26. Debentures

Debentures are a type of long-term debt instrument issued by a company to raise capital. Unlike bonds, which are typically secured by specific assets, debentures are usually unsecured, meaning they are not backed by collateral. Instead, debentures rely on the company's creditworthiness and reputation.

27. Reserves and Surplus

Reserves and Surplus refer to the portion of a company’s profits that are retained for specific purposes, rather than being distributed as dividends to shareholders.

• Reserves: These are amounts set aside out of profits for a specific purpose, such as for future expansion, contingencies, or legal requirements. Reserves can be classified into general reserves and specific reserves (e.g., for repairs or pensions).

• Surplus: This represents the balance of profits that remain after dividends and reserves have been distributed or allocated. It reflects the company’s retained earnings that are not earmarked for any specific use.

28. Contingency Reserves

Contingency Reserves are funds set aside by a company to cover unexpected expenses or losses that may arise in the future, which are uncertain in nature. These reserves are created to ensure that the company has a safety net for unforeseen situations, such as economic downturns, legal liabilities, or natural disasters.

In accounting, contingency reserves are usually classified as part of the reserves in the equity section of the balance sheet. These reserves are typically non-distributable, meaning they cannot be paid out as dividends and are kept to safeguard the company's financial stability.

29. Gratuity Payable

Gratuity Payable refers to the amount a company owes to its employees as a gratuity, which is a lump-sum payment made to an employee upon retirement, resignation, or death, based on their years of service. The company is legally or contractually obligated to pay this amount according to employment agreements or statutory provisions in certain jurisdictions

30. Dividends Payable

Dividends Payable represent the amount of dividends declared by a company but not yet paid to its shareholders. This is a liability because the company has an obligation to distribute the dividends to the shareholders.

31. Bonus Payable

Bonus Payable refers to the amount of bonus compensation that a company owes to its employees, typically as a reward for performance, achieving targets, or as part of an annual incentive scheme. The bonus is accrued during the period in which the company earns revenue and employees fulfill their work obligations, but it may be paid at a later date.

32. Interest Payable

Interest Payable refers to the amount of interest a company owes on loans, bonds, or other borrowings, but has not yet paid. It is an accrued expense, representing the liability the company has incurred for the use of borrowed funds over a specific period.

33. Deferred Revenue

Deferred Revenue (also known as Unearned Revenue) refers to money a company has received from customers for goods or services that have not yet been delivered or performed. It represents an obligation for the company to fulfill in the future.

34. VAT Payable

VAT Payable (Value Added Tax Payable) refers to the amount of VAT a company owes to the tax authorities on sales of goods or services, which has not yet been paid. It arises when a company collects VAT from its customers on sales but has not yet remitted the collected amount to the tax authorities.

35. GST Payable

GST Payable (Goods and Services Tax Payable) refers to the amount of GST a company owes to the tax authorities on the sale of goods or services that has not yet been paid. Similar to VAT Payable, GST Payable arises when a company collects GST from customers on sales but has not yet remitted it to the government.

36. Income Tax Payable

Income Tax Payable refers to the amount of income tax a company owes to the tax authorities but has not yet paid. It is the accrued tax liability based on the company's taxable income for the period, which has been calculated but is due for payment in the future.

37. Security Deposits

Security Deposits refer to amounts of money that a company either receives or pays to secure a service or rental agreement, which is refundable under certain conditions. For example, a company may receive a security deposit from customers as a guarantee for leased property, equipment, or as part of a rental agreement. Alternatively, the company may pay a security deposit to a landlord or service provider.

38. Advances from Customers

Advances from Customers represent payments that a company receives from customers before delivering goods or providing services. These payments are recorded as liabilities because the company has an obligation to fulfill the contract by delivering the goods or services in the future.

39. Bills Payable

Bills Payable refer to the amounts a company owes to creditors, typically due to the receipt of goods or services on credit, and represented by a formal promissory note or bill of exchange. These are short-term liabilities that need to be paid by the company within a specified period, often 30, 60, or 90 days.

40. Sundry Creditors

Sundry Creditors refer to amounts a company owes to various suppliers or vendors for goods and services received on credit, but that are not necessarily due under a formal contract or promissory note. This term is often used to refer to a collection of smaller, informal credit obligations.

41. Royalty Payable

Royalty Payable refers to the amount a company owes to an individual or organization for the use of their intellectual property, such as patents, trademarks, copyrights, or natural resources. The payment is typically based on a percentage of the revenue or profit derived from using the intellectual property or resources.

42. Salary Payable

Salary Payable refers to the amount of salaries a company owes to its employees for work performed, but has not yet paid. This can occur when the salary is accrued for a specific period, but the payment is due at a later date.

43. Audit Fees Payable

Audit Fees Payable refers to the amount a company owes to external auditors for the audit services provided but has not yet paid. These fees are typically billed at the conclusion of the audit process and are considered a liability until the company settles the payment.

44. Transportation Payable

Transportation Payable refers to the amount a company owes to transportation providers (such as shipping companies, freight carriers, or delivery services) for the transportation of goods or services that have been provided but not yet paid for. This liability arises when a company incurs costs for moving goods or products but has not yet settled the payment.

45. Service Charges Payable

Service Charges Payable refers to the amount a company owes for services that have been provided but not yet paid for. These charges may include fees for professional services, utilities, maintenance, or other ongoing services that the company has received.

46. Legal Fees Payable

Legal Fees Payable refers to the amount a company owes to legal professionals or law firms for legal services provided but not yet paid for. These fees may include charges for legal consultations, representation, or other legal services related to business operations, disputes, or transactions.

47. Utility Payable

Utility Payable refers to the amount a company owes for utilities such as electricity, water, gas, or other essential services that have been used but not yet paid for. These are recurring expenses that are typically billed on a monthly or quarterly basis.

48. CSR Expenses Payable

CSR Expenses Payable refers to the amount a company owes for Corporate Social Responsibility (CSR) activities that have been planned or incurred but not yet paid. These expenses may include donations, community development projects, environmental initiatives, or other social responsibility efforts that the company has committed to.

49. Rent Payable

Rent Payable refers to the amount a company owes for rental space or property that has been used but not yet paid for. This could include rent for office space, retail locations, or other facilities the company leases.

50. Shareholder’s Equity

Shareholder’s Equity (also known as Owners’ Equity) represents the residual interest in the assets of a company after deducting its liabilities. It reflects the ownership value held by shareholders and is an important measure of a company's financial health.

It consists of the following components.

Share Capital: The funds raised by the company through the issuance of shares. This includes the nominal value (par value) of shares issued to shareholders.

Retained Earnings: The accumulated profits of the company that have not been distributed as dividends and are reinvested into the company for growth, debt repayment, or other uses.

Reserves: Funds set aside from profits for specific purposes, such as future expansion, contingencies, or legal requirements (e.g., general reserves, capital reserves).

Additional Paid-in Capital: Any amount received from shareholders above the nominal value of shares issued, also known as share premium.

51. Gain on Sale of Investements/Aseets

Gain on Sale of Investments/Assets refers to the profit a company earns from selling investments, property, or other long-term assets for more than their book value or original purchase cost. It represents the difference between the selling price and the carrying value (or book value) of the asset or investment.

For example, if a company sells a piece of equipment for $10,000, but the carrying value of the equipment is $7,000, the gain on sale would be $3,000 ($10,000 - $7,000).

Conclusion

Here we have listed the debit items and credit items in the trial balance with a simple rule. This would be helpful to understand the simple concept on the list of debit items & credit items in trial balance. Also, feel free to share the content and comment below on your views or feedback.

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