Solution 4.1

Solution 4.1

Advantages of preparing a trial balance

The big advantage of using a trial balance is that although it does not highlight all errors it does highlight a significant proportion of errors and thus should be used as one of many checks to ensure proper control over the recording of transactions. When the trial balance does not balance then personnel are alerted to the possibility of errors and should begin investigations.

The trial balance provides a summary of the transactions that have occurred in a period. This summary can be used when preparing the financial statements of a business.

Disadvantages of preparing a trial balance

The only concern with preparing a trial balance is that an assumption could be made that once the trial balance balances that there are no errors in the bookkeeping system. There are six errors that can have occurred that a trial balance will not indicate.