4. The Trial Balance

Question 1

Balances brought forward as an important source of information:
1. Debit balance on an access account
2. Credit balance on an income account
3. Debit balance on an asset account
4. Credit balance on a liability account

Answer 1

1. will disclose amount expended to date
2. amount earned to date
3. disclose amount expended to date to acquire asset and to bring it to its current condition. May also show the current value of asset if asset has been revalued + effect has been reflected in the accounting records.
4. Disclose amount due to the creditor

Question 2

A debit balance (excess debits over credits) represents:

Answer 2

-An asset: recorded in the balance sheet
-An expense: recorded in the profit and loss account

Question 3

A credit balance (excess credits over debits) represents:

Answer 3

-A liability: recorded in the balance sheets
-An item of income: recorded in the profit and loss account

Question 4

What is the trial balance?

Answer 4

-Used to check the double-entry has been completed
-Done by preparing two lists: all of the debit and credit balances brought forward and compare totals

Question 5

Is the bookkeeping system perfect?

Answer 5

Although the total of debits equals the total of credits, this does not mean that the bookkeeping system is perfect; an incorrect amount my have been entered on both sides of the trial balance

Question 6

What if the trial balance does not balance?

Answer 6

• Indicates a mistake has been made
• come back to page 55 to sort out

Question 7

What is the next step? (after now producing a summary of transactions for the year in the form of a balance on each account)

Answer 7

To produce the final accounts