What is a trial balance?

A trial balance is a crucial accounting report that summarizes all the ledger accounts and their respective balances at a given point in time. It serves as a tool to verify that the total debits equal total credits, which is essential for ensuring the accuracy of the accounting records. This report is typically prepared at the end of an accounting period, allowing accountants to check for any discrepancies before generating financial statements.

The trial balance lists each account from the general ledger, such as assets, liabilities, equity, revenue, and expenses, alongside their balances. This comprehensive overview helps in identifying any errors in recording transactions, as any imbalance between total debits and total credits indicates potential mistakes that need to be investigated.

In contrast, the other options do not accurately define a trial balance. For instance, a report on the company’s cash flow emphasizes inflows and outflows of cash rather than account balances. An overview of accrued expenses focuses solely on liabilities related to expenses already incurred but not yet paid, thus missing the overall account summary aspect. Finally, an evaluation of temporary accounts pertains to the analysis of accounts that are reset at the end of each accounting period, such as revenues and expenses, but does not encompass the entire scope of ledger accounts.