What is a trial balance?

A trial balance is a report that lists all account balances in the general ledger at a specific point in time. Its primary purpose is to ensure that the total debits equal the total credits, which indicates that the accounts are in balance. By compiling all account balances, a trial balance aids in identifying any discrepancies or errors in the accounting records before proceeding to create financial statements.

This report serves as a foundational tool in the accounting process, allowing accountants to verify the accuracy of the ledgers and to prepare further financial reports such as the income statement and the balance sheet. The other options, while related to financial reporting, do not accurately define what a trial balance is. For instance, summarizing overall company performance pertains more to financial statements, calculating tax liabilities involves the tax returns process, and a detailed income statement focuses on revenues and expenses rather than overall account balances.