Trial Balance Flashcards
1
Q
Define what is a trial balance.
A
A trial balance is a list of all the ledger accounts and their balances at a given date.
2
Q
Explain 2 purposes of preparing a trial balance.
A
1) Serves as a check on the arithmetic accuracy- Check that the total of all accounts with debit balances is equal to the total of all accounts with credit balances
2) Helps in the preparation of the financial statements
3
Q
Explain the limitations of the Trial Balance.
A
A balanced Trial Balance may still contain errors.
4
Q
State the errors not revealed by the Trial Balance.
A
· Error of omission · Error of commission · Error of principle · Error of original entry · Compensating errors · Complete reversal of entries
