The trial balance

THE TRIAL BALANCE
A trial balance is a bookkeeping worksheet in which the balances 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 that the entries in a company’s bookkeeping system are mathematically correct.
A trial balance is so called because it provides a test of a fundamental aspect of a set of books, but is not a full audit of them. A trial balance is often the first step in an audit procedure, because it allows auditors to make sure there are no mathematical errors in the bookkeeping system before moving on to more complex and detailed analyses.
KEY TAKEAWAYS

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  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. 
  
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  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. 
  
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  Debits and credits of a trial balance must tally to ensure that there are no mathematical errors, but there could still be mistakes or errors in the accounting systems.
  

Trial Balance
How a Trial Balance Works
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 that there are no errors in a company’s accounting system. For example, transactions classified improperly or those simply missing from the system still could be material accounting errors that would not be detected by the trial balance procedure.