Learn About Trial Balance Preparation in California
Trial Balance is a technique for checking the accuracy of the debit and credit amounts recorded in the various ledger accounts. It is basically a statement that exhibits the total of the debit and credit balances recorded in various accounts of ledger.
Accordingly, the CFO prepares a trial balance to check the accuracy of the various transactions that are posted into the ledger accounts. It is certainly one of the important accounting tools as it reveals the final position of all accounts. Further, it is used in preparing the final accounting statements of the business.
Now, the whole idea of preparing Trial Balance is to simplify the task of preparing the basic financial statements. Thus, a business owner or the accountant can simply draw balances of all accounts from the Trial Balance. He does not have to look for such balances in each ledger account.
Typically, Trial Balance is prepared at the end of an accounting year. However, a business may choose to prepare the Trial Balance at the end of any specific period. This could be at the end of each month, quarter, half a year or a year as per the need.
Preparing a trial balance for a company serves to detect any mathematical errors that have occurred in the double-entry accounting system. If the total debits equal the total credits, the trial balance is considered to be balanced, and there should be no mathematical errors in the ledgers.
