CPA Accountant Review Questions

Answer -D - The purpose of the trial balance is to verify that credits equal debits. The trial balance is generated as the first step of the closing process of the accounting cycle.

Key Takeaway: A trial balance is generated as the first step in closing the accounting period. It is simply to verify that the sum of the debit accounts is equal to the sum of the credit accounts. If they are not equal, corrections must be made before any more steps of the accounting cycle can be completed. The trial balance is based on the accounting equation of double-entry accounting: Assets = Liabilities + Owner’s Equity.