A trial balance is a report that lists the balances of all general ledger accounts of a company 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 trial balance is primarily used to identify the balance of debits and credits entries from the transactions recorded in the general ledger at a certain point in time. It is used to ensure that the total debits and credits are still balanced after the adjusting entries are posted to the general ledger.
A trial balance includes a list of all general ledger account totals. Each account should include an account number, description of the account, and its final debit/credit balance. In addition, it should state the final date of the accounting period for which the report is created. The trial balance shows the closing balances of all accounts in the general ledger at a point in time.
Here is an example of a trial balance:
| Account Name | Debit | Credit |
|---|---|---|
| Cash | 10,000 | - |
| Accounts Receivable | 5,000 | - |
| Supplies | 2,000 | - |
| Equipment | 20,000 | - |
| Accumulated Depreciation | - | 5,000 |
| Accounts Payable | - | 8,000 |
| Salaries Payable | - | 2,000 |
| Common Stock | - | 10,000 |
| Retained Earnings | - | 12,000 |
| Sales Revenue | - | 25,000 |
| Rent Expense | 5,000 | - |
| Utilities Expense | 2,000 | - |
| Wages Expense | 8,000 | - |
| Total | 52,000 | 52,000 |
The trial balance is not an official financial statement and is usually used internally and is not distributed to people outside the company. The trial balance is done to check that the debit and credit column totals of the general ledger accounts match each other, which helps spot any accounting errors.
