It is necessary to utilize financial tools to ensure the correct accounting, which is vital for the operating of a company. Trial balance is one of the most common techniques, as well as a balance sheet or an income statement. According to “What is a Trial Balance?” (2020), it is used with the primary purpose “to ensure that a trial balance is to ensure that the list of credit and debit entries in a general ledger are mathematically correct. (Trial Balance Definition section, para. 1). Trial balance is useful for the discovery of different financial errors (“What is a Trial Balance,” 2020). It is also helpful for the assessment of profits and the auditing process of a business.
This tool is used by management to make business decisions about the allocation of resources. Auditors can examine a company’s assets and determine if material discrepancies exist. Accountants utilize trial balances to implement fiscal control and monitor expenses (“What is a Trial Balance,” 2020). Finally, a parent company examines its subsidiaries’ trial balances to monitor their financial health. This tool includes the following components: account number, account name, ending debit balance, and ending credit balance. Therefore, the trial balance is necessary for ensuring a company’s correct functioning concerning financial performance.
Reference
What Is a Trial Balance? (2020). Onlinemasters.Ohio.