Trial balance - JSS3 Business studies Past Questions and Answers - page 2
How does the trial balance help in error detection?
By automating data entry
By listing ledger account balances
By preparing tax returns
By auditing financial statements
What does the total debit column of a trial balance represent?
Assets
Liabilities
Expenses
Equity
Which of the following is a liability typically found on a trial balance
Owner's Capital
Accounts Payable
Sales Revenue
Rent Expense
How does the trial balance aid in verifying the accounting equation?
By listing income and expenses
By totaling assets and liabilities
By ensuring total debits equal total credits
By calculating net income
What does a credit balance in an account signify in a trial balance?
The account has a surplus
The account has a deficit
The account is an asset
The account is an expense
Which of the following statements accurately describes the trial balance?
It is prepared after financial statements
It includes only income statement items
It verifies the accuracy of ledger balances
What is the primary purpose of a trial balance in accounting?
The primary purpose of a trial balance is to verify the accuracy of ledger balances and to ensure that total debits equal total credits.
Can you explain the significance of preparing a trial balance before financial statement preparation?
Preparing a trial balance helps in detecting errors in recording transactions, ensures the accounting equation is balanced, and provides the necessary data for preparing financial statements.
How would you classify ledger account balances on a trial balance?
Ledger account balances are classified into debit and credit columns based on whether they have debit or credit balances.
What are some common examples of balance sheet items found on a trial balance?
Common examples include assets (such as cash, accounts receivable, and inventory), liabilities (such as accounts payable), and equity (such as owner's capital).