Question

Discuss the purpose of the trial balance and what the organization uses it for. What individuals would be the users of the trial balance in an organization?

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Answer 1

The most significant purpose of preparing Trial Balance is to check the arithmetical accuracy of the accounting entries.

As you know the first equation of Accountancy i.e.

Debits = Credits

Trial balance shows that this matches and in the cases where it doesn't match, Suspense account is created to match these.

Other than this the balances of specific accounts can be checked from the trial balance to see the specific expenses incurred by the organisation in that year or any specific income. This could be of use to any individual.

Hope this meets your purpose.

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