The trial balance is an accounting instrument that allows you to quickly view the status of a company's accounting at a certain time.
In most legislation, its preparation is at the discretion of the employer, although its use is widely recommended since it allows to know precisely if there is an error in the financial statement of the company and thus be able to correct it before preparing the annual accounts.
In this way, the fundamental objective of this balance sheet is to serve as a tool to check that there are no misquoted entries in the General Ledger of a company. Even so, the fact that the trial balance shows correct results does not guarantee that there are no accounting errors, since, for example, a payment could have been received from a customer and noted it to another person, so the accounts would balance, but they would not be correct.
Ultimately, the task of carrying out the trial balance must be accompanied by a review, one by one, of all the entries contained in the General Ledger to be sure that everything is in order.
Contrary to what happens with the final balance, the trial balance does not have a specific period for publication or closing, although it is recommended to prepare it on a quarterly basis.
Trial Balance Composition
Similar to other accounting records, the trial balance is presented divided into two large parts. Thus, in its upper part or heading, are the name of the company, the name of the record "Trial Balance" and the date corresponding to the collection of the data reflected in the accounts.
On the other hand would be the body, located in its lower part, which is made up of various columns, among which the two columns of sums and balances stand out.
Preparation of the trial balance
The preparation of the trial balance begins by obtaining the sum of the entries for each account, which includes debits and credits. With these data the balance of the accounts is calculated.
In the case of being an account where an asset or an expense is reflected, then the result will be determined by the difference between debit and credit, while if the data is for an income or a liability, the calculation will be the other way around, subtracting the debit. having. Finally, this data is what is transferred to the trial balance.
Photos: iStock - hocus-focus
