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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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A trial balance:

  1. lists only revenue and expense accounts;
  2. lists all accounts and their balances.
  3. will help detect omitted journal entries.
  4. detects all errors that could be made during the journalizing or posting steps of the accounting cycle.

To determine

Introduction: A trial balance lists the balances of each general ledger accounts of a company. It contains the name of each general ledger account and the value of that general ledger balance. Each general ledger has either debit or credit balance and the trial balance is prepared in order it appears in the general ledger that is assets first, then liabilities, stockholder’s equity, revenue and expenses. The preparation of trial balance is a used to generate financial statements.

To choose- The correct option that is if trial balance lists only revenue and expenses account or trial balance lists all accounts and their balances or if a trial balance will help detect omitted journal entries or if trial balance detects all errors that could be made during the journalizing or posting steps of the accounting cycle.

Explanation

Explanation for correct answer- A trial balance is a statement in which the balances of all general ledger accounts are compiled. It shows the total debit and total credit balances of all the accounts and the total of all debit amount equals the total of all credit amount. Thus, the statement that trial balance is a list of all accounts and their balances is correct.

Explanation for incorrect answer-

Option A- This is incorrect because a trial balance is a list of the balances of all general ledger accounts which means it includes assets, liabilities, stock holder’s equity, revenue and expenses in the order it appears in the general ledger...

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