A trial balance is a report that lists the balances of all the general ledger accounts of a business at a certain point in time. It is a bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal. The purpose of a trial balance is to ensure 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, which must be found before a profit and loss statement and balance sheet can be produced.

A trial balance is usually prepared by a bookkeeper or accountant who has used daybooks 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. The debits and credits include all business transactions for a company over a certain period, including the sum of such accounts as assets, expenses, liabilities, and revenues. The trial balance is a worksheet with two columns, one for debits and one for credits, that ensures a company’s bookkeeping is mathematically correct.

The trial balance is important in case of adjustments. Whenever any adjustment is performed, the trial balance should be run to confirm if all the debit amount is equal to the credit amount. Trial balances are used to prepare balance sheets and other financial statements and are an important document for auditors. By assessing whether or not debit balances and credit balances match, trial balances can help an accounting team generate a balance sheet, check the accuracy of their double-entry accounting practices, and identify any errors in their accounting, such as transactions that have been entered in the wrong account.