Which of the following statements best explains what a trial balance is?

• A. A statement that lists all ledger account balances at a specific date to check the mathematical accuracy of the double-entry bookkeeping system.
• B. A document used to record all transactions in chronological order before posting to the ledger accounts.
• C. A report that details the cash inflows and outflows of a business over a period of time.
• D. A financial statement that shows the revenues and expenses of a business for a specific period.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of a trial balance. A trial balance is a statement that lists all ledger account balances at a specific date. It is used to check the mathematical accuracy of the double-entry bookkeeping system by ensuring that total debits equal total credits.
2. Step 2: Analyze the options provided in the question. The correct answer should align with the definition of a trial balance.
3. Step 3: Eliminate incorrect options. For example, 'A document used to record all transactions in chronological order before posting to the ledger accounts' describes a journal, not a trial balance. Similarly, 'A report that details the cash inflows and outflows of a business over a period of time' refers to a cash flow statement, and 'A financial statement that shows the revenues and expenses of a business for a specific period' refers to an income statement.
4. Step 4: Identify the correct option. The statement 'A statement that lists all ledger account balances at a specific date to check the mathematical accuracy of the double-entry bookkeeping system' matches the definition of a trial balance.
5. Step 5: Conclude that the correct answer is the first option, as it accurately describes the purpose and function of a trial balance in financial accounting.