What Is Trial Balance

This Free Online accounting training tutorial on Trial Balance will help you to understand:

  • What is Trial Balance
  • Definition of Trial Balance
  • Importance of Trial Balance in Accounting

Trial balance is the list of each account with their debit and credit balances at a given time. At the end of an accounting period, a company prepares a trial balance. The accounting statement of trial balance is brought from ledger account. Trial balance maintains the order of ledger account. As ledger account records the debit balances in the left column and the credit balances in the right column, trial balance also enlist the debit balance to debit side and credit balance in the right side. The right and left column of the trial balance must maintain the equality of debit and credit balance that means the total balances of both sides must be equal. Equality of both sides occurs due to double entry system.

Trial balance plays an effective role in whole accounting procedure. Such as trial balance ensures the mathematics equality of debit and credit column, identify the error of journalizing posting and the recording procedure of trial balance and also help in the preparation of financial statement.

In summary, the whole accounting procedures of trial balance are as follows:

  • A. At the end of accounting period, listing of all account titles with their debit and credit balances.
  • B. Total the sum of debit and credit balance.
  • C. Ensures the mathematical equality of both columns.

But a trial balance does not always ensure that the all the account statements that are taken from ledger account must be fully correct all the time. Though the both column of trial balance are equal, but the recording process of trial balance may contain error. For example, elimination of any journal entry or incorrect journal entry is a marked error but trial balance will maintain equality of both columns.

So if the ledger or journal account will record equal amount in both side whether it is wrong or right, the trial balance will balance the both sides.






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