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When is the trial balance prepared? What is the purpose?

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When is the trial balance prepared? What is the purpose of preparing a trial balance? What does the trial balance tell you? What does the trial balance not tell you? Why not use the trial balance to report financial information internally and externally? What limitations does it have over formal financial statements?

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A trial balance is prepared at the end of the period. It lists all the accounts of the organization and the balance. The purpose of the unadjusted trial balance is to see what adjusting entries, re-classifications and corrections are needed to create proper GAAP financial statements. After the adjusting/reclassification/correcting entries, the purpose of the adjusted trial balance is to give the balances needed to create the financial statements, double-check ...

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