Trial Balance
A report listing all account balances to verify that debits equal credits.
A trial balance lists every general ledger account with its debit or credit balance at a point in time. If totals don't match, there are errors to correct. While a balanced trial balance doesn't guarantee error-free books (transactions could be in wrong accounts), it confirms the mathematical accuracy of the double-entry system.
Example
At month-end, a bookkeeper generates a trial balance with 25 accounts—total debits and credits both equal $245,000, confirming the books are balanced.
Why It Matters for Your Business
An unbalanced trial balance means errors exist that will produce inaccurate financial statements and potentially incorrect tax filings.
Related Terms
More Accounting Terms
Accounts Payable
Money owed by a business to its suppliers or creditors for goods or services received but not yet paid for.
Accounts Receivable
Money owed to a business by its customers for goods or services delivered but not yet paid for.
Accrual Accounting
An accounting method that records revenues and expenses when they are incurred, regardless of when cash is exchanged.
Asset
Any resource owned by a business that has economic value and can provide future benefits.
Balance Sheet
A financial statement showing assets, liabilities, and equity at a specific point in time.
Related Financial Guides & Resources
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