What is trial balance in simple words?

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. The general purpose of producing a trial balance is to ensure the entries in a company’s bookkeeping system are mathematically correct.

What does the trial balance reflect?

A trial balance lists all the accounts in a general ledger. The debit and credit balances should be equal; any discrepancy in the totals would signal the presence of a mathematical error in the accounting system.

Who uses trial balance?

Accountants use the trial balance spreadsheet as the basis while preparing a financial statement. A trial balance is made in accordance with the double-entry concept of bookkeeping. This means that for every entry recorded in the debit column, a corresponding credit entry will also be recorded in the credit column.

Why would a trial balance not balance?

The trial balance has two sides, the debit side and the credit side. The debit side and the credit side must balance, meaning the value of the debits should equal the value of the credits. A trial balance will not balance if both sides do not equal, and the reason has to be explored and corrected.

What are the three types of trial balance?

There are three different types of trial balances drawn at various accounting cycle stages. Adjusted Trial Balance. Unadjusted Trial Balance. Post closure Trial Balance.

How do you make a trial balance?

To create a trial balance, do the following: In the Binder window, click the workpaper tab where you want to put the trial balance. Select File > New > Trial Balance. You can also right-click, and select New Trial Balance. You can also click on the New Trial Balance icon on the toolbar.

How do you calculate trial balance?

The trial balance is calculated by summing the balances of all the ledger accounts. The account balances are used because the balance summarizes the net effect of all of the debits and credits in an account.

What is the difference between a trial balance and a balance sheet?

The trial balance contains balances from all accounts of the business while the balance sheet only contains information from the assets, liabilities and capital accounts. Furthermore, the trial balance is prepared at the beginning of the financial statement preparation and the balance sheet is prepared at the end.

What is trial balance and its uses?

A trial balance is used to check the accuracy of all ledger accounts normally at the end of an accounting period; the worksheet divides a company’s accounts into credit and debits in an easy to read format.