U4, AOS 1 - Trial Balance Flashcards
What is a trial balance?
A trial balance is a financial statement that lists all the balances of the general ledger accounts to ensure that total debits equal total credits.
True or False: A trial balance can identify errors in the accounting records.
True
Fill in the blank: The primary purpose of a trial balance is to verify that ________.
debits equal credits
What is the typical format of a trial balance?
A trial balance typically has two columns: one for debits and one for credits.
True or False: A trial balance is prepared at the end of the accounting period.
True
Which of the following accounts would NOT appear on a trial balance? A) Cash B) Accounts Payable C) Income Statement
C) Income Statement
What does it mean if a trial balance does not balance?
It indicates that there may be errors in the accounting entries.
True or False: A trial balance is the final financial statement prepared before the financial statements are generated.
False
What is an example of a debit account that would appear on a trial balance?
Cash
What is an example of a credit account that would appear on a trial balance?
Accounts Payable
Fill in the blank: A trial balance is usually prepared on a ________ basis.
monthly or yearly
True or False: All errors will be detected by a trial balance.
False
What is the equation that must hold true for a trial balance to be correct?
Total Debits = Total Credits
Which of the following is NOT a reason to prepare a trial balance? A) To detect errors B) To prepare financial statements C) To calculate taxes
C) To calculate taxes
True or False: A trial balance can include both temporary and permanent accounts.
True
What is the first step in preparing a trial balance?
List all account balances from the general ledger.
Fill in the blank: The trial balance is used primarily by ________.
accountants and auditors
True or False: A trial balance is a legal document.
False
What is one limitation of a trial balance?
It cannot identify all types of errors, such as omitted transactions.
What is the impact of an incorrect trial balance on financial statements?
It can lead to inaccurate financial reporting.
