What are the objectives (purpose) of preparing Trial Balance?

 Are you all curious to read, what are the objectives (purpose) behind preparing a Trial Balance? Let's see the objectives of Trial Balance in brief. It was explained in simple terms

What is Trial Balance?

Trial Balance is a statement that is prepared to ensure the arithmetical accuracy of books of accounts. It is a statement, not an account. It is prepared on a particular date to ensure the arithmetical accuracy of books of accounts i.e., to check that all accounts adhere to the Generally Acceptable Accounting Principles and there are no clerical errors exist in books of accounts.

It has all the ledger accounts having debit and credit balances. It has a debit balance and credit balance columns which are equal in amount and tallies. If both the credit and debit columns are equal in amount and tallies then it represents that there are no errors and ensures arithmetical accuracy of books of accounts. The difference amount in the Trial Balance, when debit & credit balance does not tally, will be transferred to the suspense account. When these errors are rectified, then the suspense account is closed by passing an adjustment entry. 

What are the objectives (purpose) of preparing Trial Balance?

The following were the objectives of the trial balance.

1. To ascertain the arithmetical accuracy of books of accounts

2. It helps in preparing the financial statements, to finalise the accounts.

3. It aids in summarising the financial transactions & consolidating ledger account balances

4. It helps to identify & rectify the errors, omission of transactions

5. To ensure that ledger posting is done correctly, extracting ledger account balances

6. It helps the auditors to conduct the audit in a smooth & fair manner

7. It helps to make the decisions by accountants & bookkeepers

Conclusion

Thus, the main objectives of preparing trial balance is to ascertain the arithmetical accuracy of transactions recorded in books of accounts, facilitate the preparation of financial statements, to identify and rectify the errors committed in the books of accounts