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Step 12: The Trial Balance

The trial balance is a procedure to verify that all entries in the two statements: the Balance Sheet and the Income Statement, are correctly entered when recording transactions. Its purpose is to verify that the double entry principle has been properly applied so that the total of all debit entries equals the total of all credit entries. It lists and totals the balances at the end of the period in two columns, one column for debit entries and one column for credit entries.

Thus, the trial balance is a tool to detect bookkeeping entry errors which may result in the debit and credit totals not being equal.

The trial balance leads to the preparation of the final Income Statement and the Balance Sheet.

As can be seen in the Exhibit below, an extract of the trial balance for WS M1, the two columns, debit balances (DR) and credit balances (CR), contain listings of all unadjusted debit balances and of all unadjusted credit balances. Total unadjusted debit balances

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