What is the main purpose of preparing a trial balance?
Correct answer: D. To check the arithmetical equality of ledger balances
- A. To prove that every transaction is completely correct
- B. To replace the preparation of final accounts
- C. To calculate the exact profit before adjustments
- D. To check the arithmetical equality of ledger balances
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.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
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.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Accounting questions like this
Accounting is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Ledger Accounts and the Trial Balance questions
A business purchases office furniture for cash. Which ledger posting is correct?
Which account normally receives a debit when cash is received from a debtor?
What is the primary purpose of a ledger in accounting?
Which error may exist even when a trial balance agrees?
At the end of an accounting period, the balance of an expense account is normally transferred to which account?
What does a debit balance in a personal account generally indicate?