Definition: A Trial Balance is a report that lists all account balances from the General Ledger to confirm that total debits equal total credits.
Importance: It helps ensure the accuracy of the bookkeeping process, acting as a check before finalizing financial statements.
Usage: Accountants use the Trial Balance to detect errors and inconsistencies in the financial records.
Example:
After posting transactions for January, "Sweet Treats" prepares a Trial Balance:
- Total Debits: $20,000
- Total Credits: $20,000
With the Trial Balance balanced, the accountant can proceed confidently to prepare the financial statements.