Notable benefits of trial balance can be described as follows:
1. Helps To Prove Arithmetical Accuracy
Trial balance proves the arithmetical accuracy of the books of accounts by checking and comparing debit and credit balances. If debit and credit balance are identical it ensures that transaction records are accurate.
2. Helps To Locate Accounting Errors
Trial balance helps to uncover accounting errors by comparing both sides (debit and credit) of journals. If debit and credit amount are not identical it indicates that there is an error in the books of accounts.
3. Helps To Provide Transaction Summary
Trial balance helps to simply and summarize transactions records of different. ledger account. So, it is known as the summary report of the ledger.
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4. Helps To Prepare Final Accounts
Trial balance is a basis for preparing final accounts of the business. Preparation of profit and loss account and balance sheet is possible because trial balance brings all the balances of different ledger accounts together.
5. Helps To Ascertain Profitability And Financial Position
Profit and loss account shows the profitability of the firm. Similarly, balance sheet indicates the financial position of the firm. Both profit and loss account and balance sheet are prepared on the basis of trial balance.
