What is a trial balance used for?

A trial balance is primarily used to ensure that the total debits equal total credits within the accounting records. This is a crucial step in the accounting process, as it helps to identify any discrepancies or errors that may have occurred during the recording of financial transactions. By confirming that debits and credits are balanced, accountants can have confidence in the accuracy of the financial data before proceeding to the creation of financial statements.

Although preparing financial statements is a purpose of various accounting processes, it comes after confirming the accuracy of the trial balance. Evaluating company investments and assessing profitability ratios are analytical tasks that utilize the finalized financial statements but are not directly related to the purpose of a trial balance itself. The focus of a trial balance is strictly on verifying the integrity of the double-entry bookkeeping system by ensuring that the total amounts of debits and credits are equal. This foundational check facilitates further accounting processes and reporting.