explain the objectives of trial balance
Any answer should always be short and sweet...
So, the objectives are-
1 Trial Balance acts as the first step in the preparation of financial statements. It is a working paper that accountants use as a basis while preparing financial statements.
2Trial balance ensures that for every debit entry recorded, a corresponding credit entry has been recorded in the books in accordance with the double entry concept of accounting.
3Trial balance ensures that the account balances are accurately extracted from accounting ledgers.
4Trail balance assists in the identification and rectification of errors.
1. To Check the mathematical accuracy With the help of trial balance, we can simply track if any mathematical fault is done by accountant or its assistant because at that time, trial balance will not match. We will understand that either one account is shown with fewer amounts or write incorrect amount in any side of any account. After finding that account, we can correct it. So, trial balance has become most important financial report which secures our accounts from all mathematical errors. 2. To Make Final Account of Company It is also objective of trial balance because after making trial balance, we can know which items we have already recorded and which we have to record. If we do not make trial balance and just start profit and loss account, it may possible that we forget to record some adjustment. List of balance in trial balance is also helpful to do proper change specially adjustment of provisions. 3. Comparative study of each account Trial balance is good source of telling the position of each account and compares it with past balance of same account. By making trial balance, we can decide whether closing balance of accounts will increase or decrease within two accounting period. It can also be used as the tool to decide whether there is need to decrease rate of depreciation for showing improved profit position or not. 4. To make financial budget Previous year trial balance figures are also helpful to estimate the future amount. In other words, we can make financial budget with the help of trial balance and compare with its worth.