Trial balance - Financial definition
Financial acronyms
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Concise definition of the term trial balance
A trial balance is a list of all the accounts contained in the general ledger of a business, containing the name as well as the debit or credit balance of each account.
Comprehensive definition of the term trial balance
Debit balance values will be listed in the debit column of the trial balance and credit value balance will be listed in the credit column.
The trading profit and loss statement and balance sheet and other financial reports can then be produced using the ledger accounts listed on the same balance.
The purpose of a trial balance is to prove that the value of all the debit value balances equals the total of all the credit value balances. If the total of the debit column does not equal the total value of the credit column then this would show that there is an error in the nominal ledger accounts.
This error must be found before a profit and loss statement and balance sheet can be produced. Hence trial balance is important in case of adjustments. Whenever any adjustment is performed run trial balance and confirm if all the debit amount is equal to credit amount.