Trial balance records and categorizes all the ledger balances into debit and credit in a particular period. A trial balance includes items like assets, revenues, liabilities, gains, expenses, losses and equity.
Usually, trial balance is prepared at the end of the reporting period. Each business transaction is recorded in credit and debit.
Quality trial balance shows the sum of transactions recorded in debit is equal to sum of transactions recorded in credits. If there is any error in balancing the credit and debit column, then there must be an error in recording the transaction in trial balance.
The errors are rectified by correcting the transactions and are balanced again. If balances are equal, then it is okay otherwise, repeat the process till the balances are equal.
Some of the undetectable errors are as follows −
The uses of trial balance are given below −
The advantages of trial balance are given below −
The limitations of trial balance are given below −