chapter 3 - trial balance

Question 1

definition of:

trial balance

Answer 1

a list of balances on the accounts in the ledger at a certain date

Question 2

purpose of trial balance?

Answer 2

• locate arithmetical errors

- prepare financial statements

Question 3

explain what determines whether the balance of an account is entered in the debit column or the credit column of a trial balance

Answer 3

if debit side of the acc is larger in money than credit side, the acc has a debit balance and is entered in debit column; if credit side of acc is larger in money than debit side, the acc has a credit balance and is entered in credit column

Question 4

explain what is indicated if totals of a trial balance agree

Answer 4

if dr and cr column agrees, it indicates that the double entry book-keeping is arithmetically correct

Question 5

what are the dr balances?

Answer 5

assets
drawings 
expenses
purchases
sales returns

Question 6

what are the cr balances?

Answer 6

liability
revenue 
equity 
purchases return 
sales

Question 7

is opening and closing inventory included in trial balance?

Answer 7

opening inventory is included in trial balance but closing inventory does not appear on the books when trial balance is prepared so it’s not included in trial balance

Question 8

what are the 6 types of error which may occur that a trial balance will not reveal?

Answer 8

error of:
commission
complete reversal
omission 
original entry
principle
compensating errors