A trial balance is a list of all the balances extracted from the ledger accounts of a business at a given point in time. It is used to ensure that the total debits equal the total credits in the accounts, thereby providing a preliminary check on the accuracy of the accounting records.
The trial balance lists all accounts in the ledger, including both the debit and credit balances. The debit balances are listed in the left-hand column, while the credit balances are listed in the right-hand column. The total of the debit column should equal the total of the credit column, as the basic principle of double-entry bookkeeping requires that every transaction has an equal debit and credit.
The trial balance is an important tool for detecting errors in the accounting records, such as transposition errors, omission of entries, or incorrect postings. However, it is important to note that the trial balance does not guarantee the accuracy of the accounts, as errors can still occur even if the total debits equal the total credits.
In summary, a trial balance is a list of all the balances extracted from the ledger accounts of a business, which is used to ensure that the total debits equal the total credits and provides a preliminary check on the accuracy of the accounting records.