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Trial Balance

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trial balance 

Trial Balance

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Summary: The trial balance is the starting point for all financial statement preparation. The trial balance gives you a side by side look at all of your debit and credit balances in all of your general ledger accounts. The total of the debits and total of the credits should cancel each other out for a total balance of zero. If your debits and credits are do not total to zero on your trial balance then your trial balance is out of balance and the discrepancy must be investigated; which is much easier at the trial balance level as opposed to the financial statement level. Also a trial balance is a great document for mapping which accounts to combine on the financial statement level; for instance, trade receivables, employee receivables, and other receivables may be presented on the face of the balance sheet as one line item called "Receivables."

 

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