Trial Balance is a document in which we record the closing balances of all the ledger accounts at the end of accounting period.
To prepare this document, all the ledger balances are separated into debit and credit balances.
On the debit side, you record the Assets and expenses accounts. Whereas, on the credit side you record the liabilities, capital and income accounts.
The main purpose of preparing the trial balance is to ensure that all the entries are made according to the ruling of double entry system.
Totals of both debit and credit side should match. If the totals don’t match, we need to investigate the differences. It is mandatory to resolve before the preparation of financial statements.
It is mandatory to resolve before the preparation of financial statements.
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