Trial Balance
A report listing all general ledger account balances to verify that total debits equal total credits at a given date.
FAQs
What's the difference between a trial balance and a balance sheet?
A trial balance lists every account balance (assets, liabilities, equity, revenues, and expenses) as a verification tool. A balance sheet is a formatted financial statement showing only assets, liabilities, and equity at a single point in time, intended for external stakeholders.
Does a balanced trial balance mean my books are error-free?
No. A balanced trial balance only confirms that total debits equal total credits. It won't catch errors like posting a transaction to the wrong account, recording a transaction at the wrong amount for both sides, or completely omitting a transaction.
When should the trial balance be prepared?
The trial balance should be prepared at the end of each accounting period (monthly, quarterly, annually) as part of the close process. Many businesses also run it mid-period as a sanity check. In cloud accounting systems, it can be viewed at any time on demand.
Related Terms
General Ledger
The master record of all financial transactions in a business, organized by account and used to produce financial statements.
Double-Entry Bookkeeping
An accounting system where every transaction is recorded as both a debit and a credit across at least two accounts, keeping the books balanced.
Balance Sheet
A financial statement showing a company's assets, liabilities, and equity at a specific point in time.
Income Statement
A financial statement showing a company's revenues, expenses, and net profit or loss over a specific period.