Definition of Trial balance:
A trial balance is a bookkeeping worksheet in which the balance of all ledgers are compiled into debit and credit account column totals that are equal. A company prepares a trial balance periodically, usually at the end of every reporting period. The general purpose of producing a trial balance is to ensure the entries in a company's bookkeeping system are mathematically correct.
Preparing a trial balance for a company serves to detect any mathematical errors that have occurred in the double-entry accounting system. If the total debits equal the total credits, the trial balance is considered to be balanced, and there should be no mathematical errors in the ledgers. However, this does not mean there are no errors in a company's accounting system. For example, transactions classified improperly or those simply missing from the system could still be material accounting errors that would not be detected by the trial balance procedure.
Accounting: The aggregate of all debit and credit balances at the end of an accounting period that (1) shows if the general ledger is in balance (total debits equal total credits) before making closing entries, (2) serves as a worksheet for making closing entries, and (3) provides the basis for making draft financial statements.
A statement of all debits and credits in a double-entry account book, with any disagreement indicating an error.
How to use Trial balance in a sentence?
- When you are trying to see how well your business did in the last quarter looking at the trial balance gives a good idea.
- Drill down from the trial balance or any account to view source documents, double entries and allocations in every ledger.
- Debits and credits of a trial balance being equal ensure there are no mathematical errors, but there could still be mistakes or errors in the accounting systems.
- The debits and credits include all business transactions for a company over a certain period, including the sum of such accounts as assets, expenses, liabilities, and revenues. .
- To keep a good trial balance you must try and keep great records of all the comings and goings of the money your business has.
- I approved of the trial balance as we had performed all of the necessary calculations in our new accounting books.
- A trial balance is a worksheet with two columns, one for debits and one for credits, that ensures a company’s bookkeeping is mathematically correct. .
Meaning of Trial balance & Trial balance Definition