The Purposes Of A Trial Balance(Part 2)

Earlier Part 1 describes what is a Trial Balance and its importance.

This Part 2 describe the purposes/uses of a Trial Balance.

The main purpose of preparing a Trial Balance is to prove the mathematical equality of debits and credits.

The rationale for the balancing of the debit and credit in the Trial Balance is in compliance with the double-entry system of recording, if a debit and a credit entry have been made for each transaction, the total of the debits should be equal to the total of the credits in the recording process. And naturally, when ALL the accounts are balanced and compared, the TOTAL of the DEBIT balances should equal to the TOTAL of the CREDIT balances.


Other Salient Points:

• It is prepared in each financial period as a summary of the closing of the previous ledger which proves the arithmetic accuracy of the ledger entry.
• In bookkeeping, this is a useful tool for checking the accounting entries prior to doing the period-end processing.