Question

Describe the purpose for the preparation of trial balance.

Answer 1

Here are some of the points which will explain the purpose for the preparation of trial balance.
(i) Ascertaining the Arithmetical Accuracy It is believe that if the total of both the sides of trial balance is matched the trial balance is free from arithmetical error.
(ii) Help to Get the Summary of Ledger Accounts Trial Balance acts as a consolidated statement, which provide a list of all the ledger accounts.
(iii) Helps in Preparing Financial Statement Every businessman want to know about the result of his efforts at the end of the accounting period. This can only be achieved through financial statement. A trial balance help in preparation of Trading and P&L Account and Balance Sheet.
(iv) Help in Locating Errors When the total of both the sides of a trial balance does not tally, we come to know that at least one error has occurred. And then efforts are made in this regard to find out the error and match the trial balance.