What is the purpose of a trial balance?

The purpose of a trial balance is to check the mathematical accuracy of the ledger by ensuring that total debits equal total credits. This process involves compiling all account balances from the general ledger and confirming that the sum of all debit balances matches the sum of all credit balances. This equality is crucial because, in double-entry accounting, every transaction affects at least two accounts—one debit and one credit. If the total debits do not equal total credits, it indicates that there may be an error in the ledger entries that needs to be investigated and corrected before moving on to prepare financial statements.

While preparing financial statements, assessing profitability, and conducting audits are important aspects of accounting, they do not serve the fundamental purpose of a trial balance. The trial balance specifically focuses on verifying the accuracy of recorded transactions in the ledger, which is a critical step in the accounting process before progressing to other financial reporting activities.