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Trial Balance: Definition and Meaning
Definition
A trial balance is a list of general-ledger account balances used to check that total debits equal total credits before preparing financial statements.
Why It Matters
A balanced trial balance is an important accounting control, but it does not prove that all transactions are correct. A transaction can be recorded to the wrong account while still keeping debits and credits in balance.
Accountants review trial balances for unusual balances, missing accounts, unexpected changes, and items requiring adjusting entries before finalizing financial statements.
Example
Before month-end reporting, an accountant produces a trial balance and confirms that total debits equal total credits.
Related Terms
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