What is a Trial Balance?
A trial balance is a list of accounts and account balances at an exact point in time. Trial balances are not financial statements, but they are a convenient method of proving the equality of the debit and credit balances in each account.
Trial Balance Formats?
Trial balance formats are often presented in accounting software such as QuickBooks or as data in excel sheets. Occasionally an accountant will encounter a trial balance presented as informally as numbers printed on adding machine paper with titles of the accounts jotted down beside each figure.
Certain types of errors are detectable from a trial balance. For example, if the balance of an account is incorrectly computed, the total of the debits and credits in the trial balance will be shown as being out of balance.
Why Auditors Need the Trial Balance
A trial balance provides a convenient summary of account balances for preparing financial statements and conducting annual audits. Trial balances are determined by adding the increases and subtracting the decreases for each account. If accounts have been accurately recorded in the balance sheet, then the assets will be equal to liabilities plus equity.
Elaine Allan, BA, MBA
Technology & Business Blogger
Vancouver, BC, Canada