Trial Balance

A trial balance is an internal summary that brings together the ending balances of all ledger accounts—both debit and credit—at a particular date. It serves as an initial accuracy check to ensure that the bookkeeping entries have been recorded in a balanced manner. When the total of debit balances equals the total of credit balances, the books are arithmetically consistent, though some types of errors may still go undetected. Accountants use the trial balance to spot anomalies and make necessary adjustments before preparing the final financial statements.

Example: At the end of March, a business compiles its trial balance and reports the following: Cash: ₹50,000 (Debit) Sales Revenue: ₹80,000 (Credit) Rent Expense: ₹20,000 (Debit) Capital: ₹10,000 (Credit) Here, total debits amount to ₹70,000 and total credits amount to ₹90,000. Because the totals do not match, an error exists that must be identified and corrected before final accounts can be prepared.