When preparing financial statements, which document must be referenced for both debits and credits?

The trial balance is a critical document in the preparation of financial statements, as it ensures that all debits and credits recorded in the accounting system are in balance. It is a summary of all the ledger accounts and their balances at a specific point in time, reflecting the total amounts of debits and credits. In doing so, the trial balance serves as a verification tool to detect any discrepancies in the recording process.

When preparing financial statements such as the balance sheet or income statement, the figures used are often derived from the trial balance. If the trial balance is not balanced, it indicates that there may be errors in the journal entries or postings to the ledger accounts. Therefore, referencing the trial balance is essential to ensure the accuracy of financial reporting, making it the necessary document for confirming that the sum of debits equals the sum of credits before finalizing the statements. This process helps maintain the integrity of the financial reporting system and guarantees that the financial statements depict a true and fair view of the organization's financial position.