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CMA Foundation · Fundamentals of Financial and Cost Accounting · Trial Balance

A trial balance is prepared at the end of an accounting period mainly to check which of the following?

The main objective of a trial balance is to check the arithmetical accuracy of ledger postings under double entry, by confirming that total debit balances equal total credit balances. It does not measure profit, completeness of recording or stock valuation.

  1. AArithmetical accuracy of the ledger postings under the double entry systemCorrect
  2. BWhether the business has earned a profit during the year
  3. CWhether all transactions have been recorded in the journal
  4. DWhether the closing stock has been valued correctly

Explanation

A trial balance lists ledger debit and credit balances to test that total debits equal total credits, which shows arithmetical accuracy under double entry. It does not show profit, which comes from the final accounts. It also cannot reveal whether transactions were omitted entirely or whether stock was valued correctly.

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