Legal Dictionary
Trial Balance
A statement of all debits and credits in a double-entry account book, with any disagreement indicating an error.
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Frequently Asked Questions
What is the purpose of a trial balance in law firm accounting?
A trial balance is used to verify that the total debits equal the total credits in the accounting records. It helps ensure the accuracy of the double-entry bookkeeping system and identifies any discrepancies that need to be corrected. The trial balance provides a preliminary check before preparing financial statements.
How is a trial balance prepared?
To prepare a trial balance, list all the accounts from the general ledger along with their debit or credit balances. Sum the total debits and total credits. If the totals are equal, it indicates that the books are in balance. If there is a discrepancy, it suggests an error that needs to be investigated and corrected before finalizing the financial statements.