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Importance of Trial Balance

The trial balance establishes that the total debits equal total credits, verifying the mathematical accuracy of financial transactions recorded in accounts. It serves to check the equality of debits and credits, and provides information for preparing final accounts. The trial balance is important because it summarizes all financial transactions, checks their arithmetical accuracy, helps locate errors, provides the basis for final accounts, and ensures debits and credits are equal for each account.

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Anisa Labiba
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83 views1 page

Importance of Trial Balance

The trial balance establishes that the total debits equal total credits, verifying the mathematical accuracy of financial transactions recorded in accounts. It serves to check the equality of debits and credits, and provides information for preparing final accounts. The trial balance is important because it summarizes all financial transactions, checks their arithmetical accuracy, helps locate errors, provides the basis for final accounts, and ensures debits and credits are equal for each account.

Uploaded by

Anisa Labiba
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Importance of 

Trial Balance

The reason of a trial balance is to establish that the value of all the debit value
balances equivalent the overall of all the credit value balances. It helps to verify
the mathematical correctness by showing the debit and credit balance of all the
individual accounts. If the debit agrees with the credit of trial balance, the
transaction is said to be accurate.

This is serves two main purposes. These are as under:

 To check the equality of debits and credits – an arithmetical or


mathematical test of accuracy.
 To provide information for use in preparing final accounts.

This is important due to the following reasons

 Trial balance summarizes all the financial transactions of the business.


 Trial balance provides a check on the arithmetical accuracy of recordings
of all the financial transactions of the business.
 Trial balance helps in locating errors by providing a starting point for the
location of errors committed if any.
 Trial balance provides a basis for the preparation of final accounts.
 It ensures that the transactions recorded in the books of accounts have
identical debit and credit amount.
 It shows that the balance of each ledger account has been computed
correctly.
 It shows that the balances of each and every ledger account have been
transferred accurately and on the correct side of the sheet on which trial
balance has been prepared.

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