Definition

Trial balance forms part of any company's bookkeeping exercise. This worksheet is a compilation of all ledger balances and further classification into debit and credit accounts. A trial balance is prepared periodically, commonly at the end of each reporting period.

Example

For example, Vareto's utility spend for the month includes different bill categories, each of which amounts to $ 1,000, $ 3,000, $ 2,500, and $ 1,500. The trial balance will therefore reflect a single expense account that will give the total of all these expenses = $ 8,000.

Why it matters

Trial balance is important for businesses as it allows easy identification of financial errors, thorough assessment of profits, and aids the internal auditing process.

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