What is the purpose of a trial balance?

The purpose of a trial balance is to verify that total debits equal total credits in the accounting records. This step is crucial because it ensures the fundamental principle of double-entry accounting is upheld, where every transaction affects at least two accounts and keeps the accounting equation balanced. By listing all account balances, a trial balance helps accountants identify any discrepancies or errors that might have occurred during the recording of financial transactions. If the trial balance does not balance, it indicates that an error must be investigated and corrected before proceeding to financial statement preparation.

While other options might seem relevant to financial reporting, they do not accurately describe the primary function of a trial balance. For instance, ensuring that total assets equal total liabilities is a goal achieved through the balance sheet, not the trial balance itself. Likewise, calculating net income is a function performed after preparing the income statement and involves more than just checking debits and credits. Lastly, a trial balance is not a preparatory step for the balance sheet; rather, it serves as an internal check to ensure the integrity of the accounts prior to preparing any formal financial statements.