A trial balance is a bookkeeping tool that lists all the balances in a business’s general ledger accounts at a given time. It’s a part of a financial statement prepared at the end of an accounting year to ensure the accuracy of bookkeeping system entries.
Features of trial balance:
As the trial balance definition suggests, it is a statement that lists the final balances of a company’s ledger accounts, and it has the following features:
A trial balance is usually prepared at the end of the accounting year, but it can also be ready anytime as and when needed, such as weekly, monthly, quarterly, or semi-annually
A trial balance shows each general ledger account’s account number, account name description, debit amount in the debit column, and credit amount in the credit column. It has two columns: debit and credit. The summarized column of debit and credit balances derived from several ledger accounts should be equal to keep the books balanced.
Since the trial balance provides a summary of the ledger accounts, it serves as a link between the books of accounts, Trading & Profit and Loss A/c, and Balance Sheet.
Since it is not an account but a statement of account, it does not form a part of the final accounts.
Purpose:
The main objective of a trial balance is to ensure the accuracy of the transactions recorded in the books of accounts by verifying that the total debits equal the total credits. It links between books of accounts, the profit and loss account, and the balance sheet.
