What is Trial Balance?

A trial balance is a report listing every account in the general ledger with its debit or credit balance at a point in time. In a double-entry system, total debits must equal total credits.

What it is used for

• A starting point for financial statements: the balance sheet and profit and loss are built from trial balance figures
• Year-end handoff: tax preparers often ask for a trial balance to map accounts to tax return lines
• Review: scanning a trial balance quickly reveals odd balances, such as a negative bank account, an asset account with a credit balance or an unexpected balance in a suspense account

What it does not prove

A balanced trial balance does not mean the books are right. Posting an expense to the wrong account, omitting a transaction entirely or recording the wrong amount on both sides will still balance. That is why bank and account reconciliations remain essential; see our monthly bank reconciliation guide.

Adjusted trial balance

After adjusting entries are posted, the adjusted trial balance is the basis for final statements. Some preparers also produce a post-closing trial balance after income and expense accounts are closed to equity at year end.

In modern software

Accounting software generates a trial balance on demand. We review it at every month end as part of the month-end close, looking for unusual balances before statements are sent.

Related terms

• Adjusting Entries: Adjusting entries are journal entries made at the end of a period so the books reflect revenue and expenses in the correct period.
• General Ledger: The general ledger is the complete record of every transaction posted to every account in a business's books.
• Debits and Credits: Debits and credits are the two sides of every bookkeeping entry; each account type increases on one side and decreases on the other.
• Suspense Account: A suspense account temporarily holds transactions whose correct account is not yet known.

Browse more definitions in the small business glossary.