What is a trial balance?

A trial balance is a report that lists all accounts in the general ledger along with their respective balances to ensure that the total debits equal the total credits. This serves as an important internal check in the accounting process to verify that the accounting entries are mathematically correct. The balanced nature of debits and credits is fundamental in double-entry accounting, where every transaction affects at least two accounts, thus maintaining the accounting equation.

The trial balance does not categorize accounts into just liabilities, revenues, or expenses; rather, it includes assets, liabilities, equity, revenues, and expenses. This comprehensive approach allows accountants to ascertain the accuracy of their records before proceeding to prepare financial statements, where detailed reporting and analysis take place. By establishing correct balances, the trial balance assists in identifying errors that may have occurred during the recording process, which can then be corrected before the financial statements are finalized.