Chapter 4 - Trial Balance Flashcards
1
Q
Define a trial balance
A
A list of ledger balances shown in debit and credit columns. used to check the accuracy of the double entry bookkeeping
2
Q
What is a debit balance on an account?
A
when the debit column exceeds the credit column
3
Q
What is a credit balance on an account?
A
when the credit column exceeds the debit column
4
Q
What things will a trial balance not show you? (4)
A
- A complete omission of a transaction
- Credit or debits on the correct side of the ledger but in the wrong account
- Compensating errors eg. $100 error is corrected by another $100 error somewhere.
- Errors of principle eg. cash from receivables being debited to trade accounts receivable and credited to cash instead of the other way around.
5
Q
Which of the following ledger account balances would be a credit balance in the trial balance? A Sales B Loan interest C Motor vehicle D Motor expenses
A
A Sales income is a credit balance
6
Q
Which of the following ledger account balances would be a debit balance in the trial balance? A Capital B Drawings C Bank loan D Trade payables
A
B Drawings are a reduction in capital so they are a debit balance.
7
Q
Which of the following pairs of balances would appear on the same side of the trial balance? A Rent expense and sales B Trade receivables and capital C Trade payables and bank loan D Bank interest and trade payables
A
C Both trade payables and a bank loan are credit balances.
