In essence, a trial balance is a report that shows the sum of all entries made to each of your accounts. It resembles a moment in time snapshot of each account’s balance.
What does a trial balance contain?
A trial balance is a report with two columns of numbers. One lists transactions for the current period. The other shows overall balances. You can use it to check against previous periods.
A trial balance displays the current balances in each of your accounts as well as the ratio of assets to liabilities. Many refer to it as a balance sheet.
The double-entry accounting method records each transaction as both an addition (debit) and a subtraction (credit). This method makes it easier for you to see where the money comes from and where it goes. The trial balance should be zero, showing that your books are in order and balanced.
When is a trial balance used?
How often you need a trial balance or balance sheet will vary depending on the type of business you have. It is essentially a status report where you can see how your business is doing.