{"id":251914,"date":"2023-08-27T10:07:33","date_gmt":"2023-08-27T10:07:33","guid":{"rendered":"https:\/\/imarticus.org\/?p=251914"},"modified":"2023-08-27T10:13:08","modified_gmt":"2023-08-27T10:13:08","slug":"what-is-a-trial-balance-why-is-trial-balance-essential-to-closing-the-books","status":"publish","type":"post","link":"https:\/\/imarticus.org\/blog\/what-is-a-trial-balance-why-is-trial-balance-essential-to-closing-the-books\/","title":{"rendered":"What is a Trial Balance? Why is Trial Balance Essential to Closing the Books?"},"content":{"rendered":"

As an accounting professional, having a solid knowledge of trial balance is imperative. Accounting errors are common in businesses and it is crucial to find them at the earliest before they cause any harm to the company. Professionals handling <\/span>accounting with investment banking<\/span> are well aware of such instances.\u00a0<\/span><\/p>\n

Trial balance is one of the best ways in which this problem can be handled. This balance is vital for businesses that use accrual accounting. This means that the credit and the debit amounts must match one another. In case there is a mismatch, it indicates an error in the books. With a trial balance, you can find out and get to the roots of the error in double-entry accounting books.\u00a0<\/span><\/p>\n

Understanding what is a trial balance?<\/strong><\/h2>\n

A business might have different accounts. A trial balance can be defined as a statement where there is a record of the final ledger balance of the various accounts in a business. The two columns in a trial balance are debit and credit. In the final report, you can see if the debit and the credit equal one another at a given point in time. If the debits and credits do not match the trial balance, it indicates errors.\u00a0<\/span><\/p>\n

The trial balance is prepared annually during year-end. It is used for preparing balance sheets or financial statements like profit and loss accounts. The main purpose that a trial balance serves is to ascertain the mathematical accuracy of the various business transactions which are recorded in the ledgers of the company.\u00a0<\/span><\/p>\n

Common errors in a trial balance<\/strong><\/h2>\n

A trial balance might have unequal debits and credits. This is due to some errors. Any <\/span>graduate program for commerce<\/span> lists these as some of the most common errors in a trial balance:<\/span><\/p>\n