Funeral Arts National Board Practice Exam

What is the purpose of a trial balance for a business owner?

1. Kept track of employee schedules

2. Show profits and losses

3. Manage supply inventory

4. Analyze marketing effectiveness

The correct answer is: Show profits and losses

The purpose of a trial balance for a business owner is to show profits and losses. A trial balance is an accounting report that lists the balances of all ledgers accounts at a particular point in time. It serves as a check to ensure that the total debits equal the total credits in the accounting system, confirming that the books are balanced. This financial tool allows the business owner to assess the overall financial standing of the business, helping them identify whether they are operating at a profit or a loss before the end of the accounting period. By examining the trial balance, the owner gains insights into revenue generation versus expenses, which is crucial for effective financial management and strategic decision-making. While keeping track of employee schedules, managing supply inventory, and analyzing marketing effectiveness are all important aspects of running a business, they do not relate directly to the trial balance's primary function in accounting. The trial balance focuses specifically on the financial accounts, allowing business owners to gauge their profitability effectively.