Knowra Trial balance Trial balance A report listing the balances of ledger accounts, with debit and credit columns whose totals should agree. It helps detect certain bookkeeping errors but cannot prove that every entry is correct.
General ledger : The main accounting record containing an organization’s accounts and their transaction entries. The trial balance gathers the ending balances recorded across this ledger.
Adjusting entry : An end-of-period journal entry that assigns revenues and expenses to the correct accounting period. Adjustments change ledger balances, so accountants prepare a new trial balance afterward.
Balance sheet : A financial statement showing an entity’s assets, liabilities, and equity at a point in time. Unlike a trial balance, it presents a structured financial statement rather than all ledger balances.
Ledger account : A record that accumulates increases, decreases, and a balance for one category of financial activity. Each listed balance belongs to an individual ledger account.
Double-entry bookkeeping : An accounting system that records each transaction in equal debit and credit amounts across accounts. Equal total debits and credits in the trial balance follow from this recording rule.
Adjusted trial balance : A trial balance prepared after adjusting entries have been posted. It presents the updated balances used to prepare financial statements.
Bank reconciliation : A process that explains differences between a bank statement and an entity’s cash records. It tests a specific cash account against an external record, beyond debit-credit equality.
Chart of accounts : An organized list of the accounts an entity uses to classify and record transactions. Its account structure determines which balances appear as separate trial-balance lines.
Debit and credit : The two sides of an accounting entry, used to record changes in accounts according to accounting rules. The trial balance separates account balances into these two columns.
Financial statement : A formal report summarizing an entity’s financial position, performance, or cash flows. Trial-balance balances provide the account data from which statements are assembled.
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