A trial balance can be defined as a statement of balances extracted from the various accounts in the ledger with a view to test the arithmetical accuracy of the books of account. It is has two sides debit and credit and they both should be equal.
Features of trial balance :
- Trial balance can be prepared anytime during the accounting period.
- It is prepared to check the arithmetical accuracy of posting of entries from journal to ledger, in other words it is an instrument for carrying out the job of checking and testing.
- It is not a part of the double entry system of book keeping but only for checking the accuracy of posting. However it does not reveal all errors.
Objectives of preparing trial balance:
- It ensures that all transactions have been recorded with the same debit and credit amounts
- It makes the preparation of trading, profit and loss account and balance sheet easy by making available the balances of all account at single place.
- By identifying errors in the books of accounts it helps in rectifying those errors before the preparation of the final accounts.