trial balance

Thân thiện

The accountant prepares a trial balance at the end of the month.

Definition

Noun: 1. A bookkeeping statement: A "trial balance" is a financial worksheet or statement prepared in double-entry bookkeeping. It lists the closing balances of all the general ledger accounts (such as cash, accounts receivable, expenses, and equity) at a specific point in time. 2. A test of mathematical accuracy: Its primary purpose is to test the arithmetic equality, or "balance," between the total sum of all debit balances and the total sum of all credit balances recorded in the ledger. If the totals match, it suggests the accounts are mathematically correct, though it does not guarantee the absence of other types of errors.

Usage Examples

• Noun:
  • The accountant prepared a trial balance at the end of the month to check for any posting errors.
  • Before creating the financial statements, you must first ensure the trial balance is in balance.
  • A discrepancy in the trial balance indicated that a journal entry was posted to the wrong account.

Advanced Usage

• "To extract a trial balance": This is a formal phrase used in accounting to describe the process of preparing the trial balance by listing all the ledger account balances.
  • The first step after closing the books is to extract a trial balance.
• "Adjusted trial balance": A trial balance prepared after adjusting entries (for accruals, deferrals, depreciation, etc.) have been posted to the ledger. This version is used to prepare the financial statements.
  • The income statement and balance sheet are prepared directly from the adjusted trial balance.

Variants and Related Words

• Balance (n): In accounting, the difference between the debit and credit sides of an account. A trial balance is a list of these individual account balances.
• General Ledger (n): The complete record of all financial transactions and accounts for a company, from which the trial balance is compiled.
• Double-entry bookkeeping (n): The accounting system where every transaction is entered twice, as a debit in one account and a credit in another, forming the basis for the trial balance.

Synonyms

• Worksheet (in an accounting context): A trial balance is often the first part of a multi-column worksheet used to prepare financial statements.
• Proof of accounts: An informal term describing the trial balance's function as a check on the ledger's arithmetic accuracy.

Related Phrases

• "The trial balance is in balance": This phrase means the total debits equal the total credits on the trial balance sheet.
  • We can proceed with the financial reports because the trial balance is in balance.
• "The trial balance is out of balance" or "The trial balance does not balance": This indicates that the sum of debits does not equal the sum of credits, signaling an arithmetic error that must be found and corrected.
  • We spent the afternoon finding the transposition error that caused the trial balance to be out of balance.

Học thuật

Noun

1. a balance of debits and credits in double-entry bookkeeping; drawn up to test their equality