What is the main purpose of a trial balance prepared from ledger balances?
Correct answer: B. To test arithmetical agreement of debits and credits
- A. To calculate gross profit
- B. To test arithmetical agreement of debits and credits
- C. To record daily transactions
- D. To prepare source documents
Explanation
A trial balance lists ledger balances to check whether total debits equal total credits. Agreement does not prove that every error, such as an error of principle, has been avoided.
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About Double Entry and Books of Prime Entry
Double entry records every transaction with equal debit and credit entries, based on the accounting equation and the classification of assets, liabilities, capital, income and expenses. Books of prime entry include the sales, purchases, returns and cash books, journal, and source documents used before transactions are posted to ledger accounts.
Practise Double Entry and Books of Prime Entry
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