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Advantages of a Trial Balance

💡 The debit and credit balances of all accounts are reported in a trial
balance statement in order to determine the arithmetical accuracy of the
books of accounts. The only stipulation is that all accounts must be
balanced before a Trial Balance may be drawn. The trial balance is not
included in the diary or ledger. It's just a statement or a list.

Checking Arithmetical Accuracy:

While migrating figures from various ledger books such as purchase books, sales
books, cash books, and so on, the trial balance is used to verify the real amount put
on the right side of the current account. Aside from checking the accuracy of general
ledger accounts, trial balance is also beneficial for checking the accuracy of special-
purpose accounting books.

Assist in Preparing Financial Statements:

At the end of each accounting year, a profit and loss account, a balance sheet, and a
cash flow statement must be generated. The trial balance already has the balances
of all the ledger accounts necessary to create financial statements. As a result, it
facilitates the preparation and analysis of financial accounts.

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 Assist in Rectifying errors::
The trial balance's debit total must equal the trial balance's credit total. This verifies
the ledger postings' arithmetical accuracy. If this does not occur, the accountant will
be forced to locate and correct the issue. As a result, accountants are relieved when
the trial balance debit and credit totals match.

Assist in Adjustments:
During the trial balance preparation process, adjustment accounts such as prepaid
expenses, outstanding liabilities, closing stock, and so on must be produced. This
makes it easier to make adjustments that are just relevant to the current fiscal year.
At the end of the accounting year, businesses often prepare adjustment accounts.
There is no restriction on opening these adjustment accounts as they arise, though.

Assist in preparation of Audit Reports:

The auditors can use the trial balance to locate entries in the original books of
accounts. Essentially, what auditors need to audit is the audit trail, which trial
balance offers. Auditors can then comment on the financial statement preparation in
their audit report.

Shubh Agrawal
2120615 - 1BBA F
shubh.agrawal@bba.christuniversity.in

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