TheTaxHeaven Dictionary - Know the meaning of tax

Trial Balance

What is a Trial Balance? 

A trial balance is a report listing all balances in a company's ledger accounts at a given time. It's used for checking the accuracy of accounting records and identifying errors. Although it's not an official financial statement, it plays a crucial role in identifying and correcting errors and preparing adjusting entries. 

How a Trial Balance Works 

A trial balance ensures the accuracy of the double-entry accounting system by comparing total debits and credits in the ledgers. If they match, the trial balance is balanced, indicating no arithmetic errors. However, it does not guarantee a completely error-free accounting system as some errors may still slip through. 

Types of Trial Balance 

  • The unadjusted trial balance

  • The adjusted trial balance

  • The post-closing trial balance