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CMA Foundation · Fundamentals of Financial and Cost Accounting · Trial Balance

The trial balance of Gupta Stores shows total debits of ₹4,56,000 and total credits of ₹4,56,000 after the accountant added to the credit side a suspense balance. Which statement about a trial balance that agrees is correct?

An agreed trial balance shows only that total debits equal total credits, indicating arithmetical accuracy of the ledger postings. It does not prove the books are error-free, because errors of omission, principle, commission and compensating errors can still exist without disturbing the totals.

  1. AIt proves that no errors exist in the books
  2. BIt proves that the arithmetical accuracy of the debit and credit totals is maintained, though some errors may remainCorrect
  3. CIt proves that the final accounts are correct
  4. DIt proves that all transactions have been recorded

Explanation

An agreed trial balance only shows that total debits equal total credits. Errors of omission, commission, principle and compensating errors do not affect agreement. Hence it is not proof of complete accuracy.

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