Accounting Fundamentals Certification (AFC) 2025 – 400 Free Practice Questions to Pass the Exam

A trial balance is a crucial tool in the accounting process, serving as a summary of all the general ledger accounts at a specific point in time. The correct answer highlights that a trial balance lists all accounts with their balances, which includes assets, liabilities, equity, revenues, and expenses. This comprehensive listing helps verify that the total debits equal total credits, ensuring the accuracy of the accounting records before preparing financial statements.

The other options do not accurately describe the purpose or content of a trial balance. For instance, while items related to income are included in the trial balance, it does not directly show net income, as that figure is typically calculated during the preparation of income statements. Additionally, the trial balance encompasses all types of accounts, not just cash accounts, making it a broader overview of financial position. Lastly, a trial balance is prepared before financial statements, serving as a preliminary step in assuring that the ledger is balanced and accurate prior to final reporting.