What is the purpose of a trial balance?

The purpose of a trial balance is to ensure that debits equal credits in the ledger. A trial balance is created after all the transactions for a period have been recorded in the accounting books. It lists all the account balances and checks that the total amount of debits matches the total amount of credits. This is a key step in the accounting process, as it helps identify any errors in the recording of transactions. If the numbers do not match, it indicates that there could be mistakes that need to be investigated, such as transpositions, omissions, or other discrepancies in the accounting records. The trial balance thus serves as a quality control step before preparing the financial statements, ensuring the integrity of the financial data.

Other choices do not align with the primary function of the trial balance: summarizing cash transactions is a focus that pertains more specifically to cash flow statements; calculating taxes owed relates to tax accounting rather than balance verification; and estimating future cash flows is a predictive function that falls outside the scope of what a trial balance is designed to accomplish.