Trial Balance: Know What It Is And When To Use It In Your Business
The balance sheet is a statement widely used in accounting, to verify through debits and credits the financial health of the company. With it, it is possible to have an internal control to analyze within a specific period assets and liabilities of results.
It is important to highlight that the report can be done in different periods, that is, following the organization’s needs, being monthly, weekly, biweekly or even daily. Also, it can be edited or changed whenever necessary.
Why is it important to carry out the trial balance?
Although the accounting balance is not mandatory, it is great to inform the entire financial position of the company and, therefore, it is valuable information for financial institutions, shareholders, potential investors, competitors, suppliers and unions.
In other words, with the balance sheet, it is possible to know the business’ capacity to pay everything for everything it has, the assets, whether using borrowed money or using it from investments and shareholders. And so, assess how the company has performed over time, and account for profits and losses.
Therefore, for efficient management, the company’s balance sheet must be made as up-to-date as possible. Pointing out errors such as duplications, omissions or inversions, such as divergent balances, with great care and avoiding future losses.
Trial Balance Purpose
Remember that the trial balance is designed to ensure the integrity of accounts from volatile balances, that is, which can be changed at any time by the accounting professional. Therefore, it must contain the following items:
- Company identification;
- What is the reference date;
- What are the accounts and their groups;
- Account balance;
- Sum of credit and debt balances;
- In more detailed models, it also needs the code and full description of the accounts.
What accounts are found on the trial balance?
The trial balance is formed by income accounts. The assets are assets (goods and rights) and liabilities are obligations. In assets, you will find accounts allocated in order of liquidity, and in liabilities, in order of demand, which must be settled in a shorter period.
In income accounts, you can find income, expenses and costs. In which the revenues show all the earnings that the company has, the costs which are the values that are used to keep the company running, and in the expenses what is spent but are not directly linked to the company’s operation.
What are the types of trial balances?
Now that you know what it is, and you know how this statement is structured, it is worth knowing what the balance sheet types are. Understand that the main difference between them is the way accounts are presented. Check out:
In the synthetic balance sheet, the statement is made only from the final numbers of the company’s main balance sheet accounts.
In the analytical balance sheet, the accounts are detailed with as much detail as possible to represent the company. Thus, it is a very extensive report with relevant information for analysis.
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