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The Need for Trial Balance
DEFINITION: A Trial Balance is a statement showing list of balances in a double entry form extracted from the ledgers to test the arithmetical accuracy of the accounts. The totals of the debit and credit must be in agreement.
Nature of Trial Balance:
- It consists of all ledger balances extracted from the accounting books
- It is drawn at a particular time.
- The credit and debit column total must agree
- It must be titled and dated
- It must be sequentially arranged in the order of credit and debit items
Benefits of Double Entry:
The following are the benefits of Double Entry:
- It provides complete record of business transactions.
- It reduces the risk for fraud and facilitates the correction of errors.
- It provides basis for the test of arithmetical accuracy of the accounting records.
- It is a means of providing financial information through the preparation of financial reports.
- It enhances the reliability of accounting information that may be the product of accounting process.
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