What is a trial balance?

A trial balance is a list of all the accounts in a company’s general ledger along with their respective balances at a specific point in time. Its primary purpose is to ensure that the total of the debit balances equals the total of the credit balances, which is fundamental to the double-entry accounting system. This balance indicates that the accounts are mathematically correct and that there are no errors in recording transactions.

The trial balance serves as a preliminary step in the accounting cycle, paving the way for the preparation of financial statements. It does not summarize revenues and expenses or provide a detailed report of cash inflows and outflows, nor does it give an overview of assets and liabilities in isolation. While these concepts are important in their own right, they represent different aspects of financial reporting and are not the primary focus of a trial balance.