Explanation :Like a balance sheet, it shows the snapshot of the accounting records on a specific date. A trial balance usually consists of three columns with the account names listed in the first column and the account balances shown as debits and credits in separate columns. The total debits and credits are then summed at the bottom of the report. Since double entry accounting requires that the debits and credits balance, the trial balance debits must always equal the credits. This is a good double check when you are preparing a trial balance. If your debits don’t equal your credits, you probably don’t have all of the accounts listed or there is an error in one of the balances.
In a nutshell :
- A trial balance is a worksheet with two columns, one for debits and one for credits, that ensures a company’s bookkeeping is mathematically correct.
- The debits and credits include all business transactions for a company over a certain period, including the sum of such accounts as assets, expenses, liabilities, and revenues.
- Debits and credits of a trial balance being equal ensure there are no mathematical errors, but there could still be mistakes or errors in the accounting systems.