If debit balances = credit balances, trial balance only shows or check the ____________ and it does not indicate that no errors were made during recording and posting.
Correct answer: A. Arithmetic accuracy
- A. Arithmetic accuracy
- B. Errors of commission
- C. Omissions of economic events
- D. Understatements of balances
Explanation
Equal debit and credit totals test the arithmetic accuracy of ledger balancing and posting. They do not detect errors such as complete omissions, errors of principle, or compensating errors.
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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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Trial balance is commonly prepared?
Debit balance = Credit balance in a trial balance indicates that: