ACCA Applied Knowledge · Financial Accounting · Trial balance
Which statement best describes the purpose of a trial balance?
A trial balance checks that the total of debit balances equals the total of credit balances in the ledger. This tests only the arithmetic accuracy of double entry. It does not prove that postings went to the right accounts or that the financial statements are true and fair.
- AIt proves that the financial statements give a true and fair view
- BIt checks that total debit balances equal total credit balances in the ledger accountsCorrect
- CIt confirms that every transaction has been recorded in the correct ledger account
- DIt shows the financial position of the entity at the reporting date
Explanation
A trial balance lists all ledger balances and checks that total debits equal total credits, which is the arithmetic accuracy of double entry. It does not prove transactions are in the correct accounts or that the statements are true and fair. The statement of financial position, not the trial balance, shows financial position.
Did you get it right without looking?
One question tells you little. A timed set on Trial balance shows your real accuracy, how long you take and where you lose marks.
More Trial balance questions
- At 31 December, Kestrel Co's receivables ledger control account shows: opening balance $42,000 debit; credit sales $168,000; cash received f…
- A business paid $450 for repairs to a delivery van. The bookkeeper debited the van cost account (non-current assets) with $450 and credited …
- Which of the following is a correct description of the format of a trial balance?
- A trial balance has total debits of $482,600 and total credits of $481,200. Which single error would fully explain the difference?
- Which of the following is a purpose of the trial balance in the preparation of financial statements?
- Which statement best describes the role of the trial balance in preparing financial statements?