Trial Balance

A trial balance is a list of all the nominal ledger (general ledger) accounts contained in the ledger of a business. This list will contain the name of the nominal ledger account and the value of that nominal ledger account. The value of the nominal ledger will hold either a debit balance value or a credit value balance. The debit balance values will be listed in the debit column of the trial balance and the credit value balance will be listed in the credit column. The profit and loss statement and balance sheet and other financial reports can then be produced using the ledger accounts listed on the trial balance.

The trial balance is usually prepared by a bookkeeper or accountant who has used day books to record financial transactions and then post them to the nominal ledgers and personal ledger accounts. The trial balance is a part of the double-entry bookkeeping system and uses the classic 'T' account format for presenting values. What is 'Trial Balance'? Trial Balance is the list of names & balances of all the accounts. It shows Closing Balance standing to an account on a particular date. Trial Balance is prepared to check the accuracy of the transactions entered and have a list of balances of all the accounts at one place. It helps in preparation of Final Account Statements. It ensures that all the transactions have been recorded with their proper debit and credit accounts and the balance of each account has been computed correctly. Trial Balance is a statement which can be prepared on a particular date or for a particular period. In AXBO, the Trial Balances is prepared for a particular period. It is not an account but list of balances of the accounts. It is a tool for checking and testing the accuracy.             What is the difference between a trial balance and a balance sheet? The trial balance is an internal document—it stays in the accounting department. It is a listing of all of the accounts in the general ledger (balance sheet accounts and income statement accounts) and their respective balances as of a specified point in time, such as June 30, 2006. The purpose of the trial balance is to document that the total amount of account balances with debit balances is equal to the total of amount of account balances with credit balances. The balance sheet is a financial statement that reports the amounts of assets, liabilities, and stockholders’ equity at a specified point, such as June 30, 2006. Since it is a financial statement, it will be distributed outside of the accounting department. As a result, it should be prepared in accordance with generally accepted accounting principles. (Often the balance sheet accounts in the general ledger are summarized and combined so that the resulting balance sheet is only 20 – 30 lines in length.)