What is the main purpose of a trial balance in accounting?

What is the main purpose of a trial balance in accounting?

• A. To prepare financial statements
• B. To ensure total debits equal total credits
• C. To calculate net income
• D. To track cash flow

Answer: (B)

The main purpose of a trial balance is to ensure that the total debits equal total credits. In double-entry accounting, every transaction affects at least two accounts, with one side being a debit and the other a credit. The trial balance is a critical step in the accounting cycle, as it verifies the mathematical accuracy of the recorded transactions in the ledger. If the totals don't match, it indicates that there may be errors in the entries, prompting an investigation into the accounts and transactions. While the trial balance aids in preparing financial statements, its primary function is to check the equality of debits and credits. It does not directly calculate net income or track cash flow, which are dependent on further financial analysis and statement preparation. Therefore, the essential role of the trial balance is to serve as a preliminary check for accounting accuracy before proceeding to the next steps in the accounting process.

The main purpose of a trial balance is to ensure that the total debits equal total credits. In double-entry accounting, every transaction affects at least two accounts, with one side being a debit and the other a credit. The trial balance is a critical step in the accounting cycle, as it verifies the mathematical accuracy of the recorded transactions in the ledger. If the totals don't match, it indicates that there may be errors in the entries, prompting an investigation into the accounts and transactions.

While the trial balance aids in preparing financial statements, its primary function is to check the equality of debits and credits. It does not directly calculate net income or track cash flow, which are dependent on further financial analysis and statement preparation. Therefore, the essential role of the trial balance is to serve as a preliminary check for accounting accuracy before proceeding to the next steps in the accounting process.