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Debit balance = Credit balance in a trial balance indicates that:

Correct answer: C. Mathematically Capital+Liabilities=Assets

  • A. No error in recording transactions
  • B. No error in posting entries to ledger accounts
  • C. Mathematically Capital+Liabilities=Assets
  • D. Account balances are correct

Explanation

Equal debit and credit totals show the mathematical equality underlying the accounting equation: Assets equal Capital plus Liabilities. This agreement does not prove that every transaction was recorded or posted without error.

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About Accounting Principles

Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.

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