What is the purpose of a trial balance?

• A. To prepare the income statement directly.
• B. To test arithmetical accuracy of the ledger.
• C. To adjust entries for all accounts.
• D. To test arithmetical accuracy of the ledger and ensure total debits equal total credits; errors include mispostings, omissions, duplicated entries, or posting to wrong accounts.

Answer: (D)

A trial balance serves as a checkpoint on the ledger. You list every general ledger balance at a specific date and ensure that the total of all debit balances equals the total of all credit balances. This dual check confirms arithmetic accuracy in postings and helps reveal common posting errors, such as misposting, omissions, duplicate entries, or postings to the wrong accounts. That dual aim—verifying balanced debit and credit totals and highlighting typical errors—is why this description fits best. It isn’t used to produce the income statement directly; that comes after the trial balance by summarizing and adjusting balances. Also, while a balanced trial balance shows arithmetic consistency, it can miss some errors, like transactions recorded in the correct accounts but with wrong amounts that cancel out, but it still provides a crucial early check before preparing financial statements.