What is a trial balance?

A trial balance is a report that lists the balances of all accounts in the general ledger to verify that total debits equal total credits. Businesses typically prepare a trial balance before generating financial statements to help identify accounting errors.

Example: Before producing month-end financial statements, a company runs a trial balance to confirm that debits and credits are balanced across all accounts.

Related terms: General Ledger, Debit, Credit, Financial Statements