A trial balance is used to check the accuracy of all ledger accounts normally at the end of an accounting period; the worksheet divides a company's accounts into credit and debits in an easy to read format. The balance sheet's aim is to equate the numbers in the two columns until both sections are equal, ensuring that there are no discrepancies or mathematical errors, as noted by Investopedia.Continue Reading
In addition to being a helpful tool at the end of an accounting period, a trial balance is often asked for at the end of each year by auditors. The balance can be prepared electronically or by hand, and gives an outside accounting firm the information they need to run checks and reports required to accurately analyze a company's finances.
The check is done after the general ledger has been completed, but before accounts for a specific period are entered into final accounting records. The time between the two steps is called the trial balance period and is used to find inaccuracies and in some cases, to adjust information that is not easily explainable.
While a trial balance worksheet can help spot errors before information is given to an outside auditor, the form doesn't take into account whether all the data that is listed is correct, making it hard to determine if the numbers are correct even if the credits and the debits are equal, according to Solution Matrix Limited.Learn more about Accounting