What is a Trial Balance?

At the end of an accounting period the bookkeeper pulls the ending balance of every GL account and drops it into two columns: debits on the left, credits on the right. Asset and expense accounts normally carry debit balances; liability, equity, and revenue accounts carry credit balances. The two column footings must match. If they do, the books are arithmetically consistent and the trial balance feeds directly into the income statement and balance sheet. If they do not, a posting error exists somewhere — a transposed digit, a single-sided entry, a wrong account — and must be found before anything else happens.

A trial balance catches arithmetic and posting errors but it does not catch everything. A transaction entered to the wrong account, an entry posted twice, or an omitted transaction entirely will still leave the trial balance in balance, because each of those errors affects debits and credits equally. That is why the trial balance is a necessary but not sufficient control: it confirms the books balance, but accuracy still depends on reconciliations, review, and audit. An adjusted trial balance is produced after period-end adjusting entries — accruals, depreciation, prepayments — and is the version used to build the financial statements.