What is the purpose of a trial balance?

The purpose of a trial balance is to list the balances of all ledger accounts to ensure that total debits equal total credits. This is a critical step in the accounting process that helps in identifying any discrepancies and errors in the accounting records before financial statements are prepared.

By compiling all amounts from the various accounts, a trial balance provides a snapshot of the company's financial position at a specific point in time. If the total debits and total credits do not match, this indicates that there may be mistakes in the transactions recorded in the ledger accounts, prompting further investigation to correct those errors.

In contrast, some of the other choices focus on specific financial analysis aspects, such as assessing liquidity, summarizing cash flows, or calculating earnings, which are not the primary purpose of a trial balance. The trial balance serves more as a preliminary check, ensuring the mathematical accuracy of the bookkeeping entries rather than evaluating overall financial performance or specific cash-related metrics.