What is the purpose of a trial balance and what does it indicate when it is not balanced?

• A. To verify that total debits equal total credits after posting
• B. To show cash collections for the period
• C. To determine profitability for the period
• D. To list all accounts with balances

Answer: (A)

The main idea being tested is how a trial balance functions in double-entry accounting. A trial balance collects the balances of all ledger accounts and totals the debits and credits to check that they are equal. When the totals balance, it suggests that posting was arithmetically correct and no obvious posting errors exist. If the trial balance is not balanced, it signals that there are errors in the recording or posting process—such as a missing entry, an incorrect amount, a transposition error, or posting on the wrong side—errors that need to be found and corrected before producing accurate financial statements.