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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

When preparing a trial balance, which of the following is correct?

  1. a. The purpose of the trial balance is to prove that the total of all debit balances equals the total of all credit balances.
  2. b. Advertising Expense would normally be recorded as a credit.
  3. c. The trial balance is considered to be a financial statement.
  4. d. Supplies would normally be recorded as a credit.

To determine

Identify the correct statement during the preparation of a trial balance.

Explanation

Trial Balance:

Trial balance is the summary of accounts, and their debit and credit balances at a given time.  It is usually prepared at end of the accounting period.  Debit balances are listed in left   column and credit balances are listed in right column.  The totals of debit and credit column should be equal.  Trial balance is useful in the preparation of the financial statements.

Justification for the incorrect option of b:

Advertising expense is normally recorded as debit. Therefore, it is an incorrect option.

Justification for the incorrect option of c:

The trial balance is not considered as a financial statement because it is a trail run by the accountants in order to prove that the total of debit side equals total of credit side...

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