TRIAL BALANCE & RECTIFICATIONS OF ERRORS
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What is a Trial Balance in accounting?
A Trial Balance is a statement that lists all ledger account balances at a specific date to verify that total debits equal total credits, confirming the arithmetical accuracy of the books.
What are the two sides of a Trial Balance?
Debit side and Credit side totals.
When does a Trial Balance agree?
A Trial Balance agrees when the total of all debit balances equals the total of all credit balances, indicating no arithmetical errors in posting.
What is the purpose of preparing a Trial Balance?
To verify arithmetical accuracy of ledger accounts.
What type of errors does a Trial Balance fail to detect?
A Trial Balance cannot detect errors of omission, errors of commission, errors of principle, and compensating errors, as these do not affect the equality of debits and credits.
Which errors are disclosed by a Trial Balance?
Errors affecting only one side of an account.
What is an error of omission in accounting?
An error of omission occurs when a transaction is completely omitted from the books of accounts; since both sides are missing, the Trial Balance still agrees.
What is an error of original entry?
Wrong amount recorded in the books of original entry.
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