Trial Balance, rectification of errors and adjusting and closing entries
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What is a Trial Balance?
A Trial Balance is a statement prepared at the end of an accounting period listing all ledger account balances to verify that total debits equal total credits.
What are the two columns in a Trial Balance?
Debit column and credit column totals.
What is the primary purpose of preparing a Trial Balance?
The primary purpose is to check the arithmetical accuracy of ledger postings and ensure that the double-entry principle has been correctly applied.
What does it mean when Trial Balance totals agree?
Arithmetical accuracy of ledger postings is confirmed.
Which errors are NOT revealed by a Trial Balance?
Errors of omission, errors of commission, errors of principle, compensating errors, and errors of original entry are not revealed by a Trial Balance since debits still equal credits.
What type of error is posting to a wrong account of the same class?
Error of commission.
What is an error of omission in accounting?
An error of omission occurs when a transaction is completely omitted from the books of accounts, meaning neither a debit nor credit entry is made.
Which error is caused by recording a transaction in violation of accounting principles?
Error of principle.
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