Which of the following statements is correct about Trial Balance?
Correct answer: C. The Trial Balance has no statutory importance from the point of view of law
- A. The Trial Balance is prepared after preparing the Profit and Loss Account
- B. The Trial Balance shows only balances of Assets and Liabilities
- C. The Trial Balance has no statutory importance from the point of view of law
- D. The Trial Balance shows only nominal account balances
Explanation
A trial balance is an internal check of debit and credit equality, not a statement with independent statutory authority under company law. It is prepared before the profit and loss account and includes all ledger balances, not only assets, liabilities, or nominal accounts.
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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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