Final answer:
Comparing current and previous year's trial balances helps identify financial performance changes, accounting discrepancies, and trends in revenue and expenses, which are critical for accurate financial reporting and informed decision-making.
Step-by-step explanation:
A comparison of this year's trial balance with last year's may be a good way to discover changes in financial performance and accounting discrepancies. By analyzing changes in the trial balance, one can identify shifts in revenue and expenses and assess the overall financial health of a company.
Comparisons can reveal trends such as an increase in receivables indicating sales growth or a rise in payables suggesting a delay in paying suppliers. It may also uncover unintentional errors or intentional financial misstatements, which are critical to address for accurate reporting.
Such analyses are essential for understanding the financial position and performance over time, which effectively aids in making informed business decisions. A detailed review of financial statements, including the trial balance, can help in identifying patterns in revenue (taxes) and expense (spending), and calculate the annual budget deficit or surplus.
It also helps in comparing financial data to industry standards or other companies, including analyses such as U.S. trade surpluses and deficits relative to other countries.