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What is the primary purpose of a trial balance?

Practice Questions

Q1
What is the primary purpose of a trial balance?
  1. To prepare financial statements
  2. To ensure that debits equal credits
  3. To calculate net income
  4. To assess liquidity

Questions & Step-by-Step Solutions

What is the primary purpose of a trial balance?
  • Step 1: Understand that a trial balance is a list of all the accounts in the ledger.
  • Step 2: Know that each account has a balance that can be either a debit or a credit.
  • Step 3: Add up all the debit balances from the accounts.
  • Step 4: Add up all the credit balances from the accounts.
  • Step 5: Compare the total debits to the total credits.
  • Step 6: If the total debits equal the total credits, it means the bookkeeping is likely accurate.
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