TRIAL BALANCE Meaning and
Definition
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A trial balance is a financial document that displays the debit and credit balances of all accounts in a company's general ledger, serving as a preliminary step in the preparation of financial statements. It is prepared at the end of an accounting period to ensure the accuracy of bookkeeping records and to identify any discrepancies or errors in the recording of financial transactions.
The trial balance offers a summary of all accounts, including assets, liabilities, equity, revenue, and expenses. It lists each account's name, its debits and credits, and provides the total at the end of each column. By comparing the total debits and credits, an accountant can determine if the accounts are in balance. If the trial balance balances, it serves as evidence that the books are accurate, although it does not guarantee completeness or absence of errors.
The primary objective of the trial balance is to identify any errors in a company's accounting system before financial statements are generated. If the trial balance doesn't balance, it indicates that there are errors in recording or posting transactions, such as incorrect postings, double entries, or missed entries. Thus, the trial balance plays a crucial role in ensuring the accuracy and reliability of the financial data used for decision-making and reporting. It serves as a foundation for financial statements, such as the balance sheet and income statement, by providing a snapshot of a company's financial position at a specific point in time.
Common Misspellings for TRIAL BALANCE
- rrial balance
- frial balance
- grial balance
- yrial balance
- 6rial balance
- 5rial balance
- teial balance
- tdial balance
- tfial balance
- ttial balance
- t5ial balance
- t4ial balance
- trual balance
- trjal balance
- trkal balance
- troal balance
- tr9al balance
- tr8al balance
- trizl balance
Etymology of TRIAL BALANCE
The word "trial" in "trial balance" is derived from the Anglo-French "trier", meaning "to try" or "to test". It ultimately originated from the Latin word "tripticare", meaning "to sort" or "to sift".
The word "balance" in "trial balance" comes from the Latin word "bilanx", which means "having two scales". This refers to the balancing act of comparing debit and credit entries in accounting.
Similar spelling words for TRIAL BALANCE
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