What does an agreement of the debit and credit totals of a trial balance mainly confirm?
Correct answer: C. Arithmetical equality of postings
- A. Correct valuation of every asset
- B. Complete absence of all errors
- C. Arithmetical equality of postings
- D. Accurate calculation of net profit
Explanation
Equal trial balance totals mainly show that the recorded debits and credits are arithmetically equal. They do not prove that transactions were completely recorded, correctly classified or properly valued.
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About Ledger Accounts and the Trial Balance
Ledger accounts collect transactions under individual headings and use debit and credit sides to determine balances. The trial balance lists those balances to check arithmetical agreement before financial statements are prepared, but it does not reveal every error, such as complete omission, compensating errors or entries made in the wrong account.
Practise Ledger Accounts and the Trial Balance
34 free Ledger Accounts and the Trial Balance MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
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More Ledger Accounts and the Trial Balance questions
Which item normally has a credit balance in a trial balance?
Which balance is normally carried forward from one accounting period to the next?
A business returns goods purchased on credit to a supplier. Which account is credited?
A credit balance in a bank column of the trial balance generally indicates what?
When a transaction affects more than two accounts, the journal entry is known as what?
Which type of error is most likely to make the trial balance totals disagree?