What is the main purpose of preparing a trial balance?
Correct answer: B. To check the arithmetical equality of ledger balances
- A. To prove that every transaction is completely correct
- B. To check the arithmetical equality of ledger balances
- C. To calculate the exact profit before adjustments
- D. To replace the preparation of final accounts
Explanation
A trial balance checks whether the total debit balances equal the total credit balances. It cannot detect every error, such as the complete omission of a transaction or an error of principle.
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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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