Trial Balance

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DEFINITION of 'Trial Balance'

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns. A company prepares a trial balance periodically, usually at the end of every reporting period. The general purpose of producing a trial balance is to ensure the entries in a company's bookkeeping system are mathematically correct.

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BREAKING DOWN 'Trial Balance'

Preparing a trial balance for a company serves to detect any mathematical errors that have occurred in the double-entry accounting system. Provided the total debts equal the total credits, the trial balance is considered to be balanced, and there should be no mathematical errors in the ledgers.

However, this does not mean there are no errors in a company's accounting system. For example, transactions classified improperly or those simply missing from the system could still be material accounting errors that would not be detected by the trial balance procedure.

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RELATED FAQS
  1. What are the most important steps in the accounting cycle?

    All eight steps in the accounting cycle are important, since each step is necessary to complete the full accounting cycle ... Read Full Answer >>
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    There are many differences between a trial balance and a balance sheet. For example, a trial balance is an internal report ... Read Full Answer >>
  3. What's the difference between a trial balance and an adjusted trial balance?

    A trial balance is a simple accounting report that gives a picture of a business at periodic intervals, such as monthly or ... Read Full Answer >>
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    The difference between a general ledger and the general journal is that the general journal is considered the initial book ... Read Full Answer >>
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