Understanding Trial Balance and Basic Accounting Equation A1 Wk4

What is the primary purpose of a Trial Balance?

• To show the financial health of a company

• To prove that journal entries are posted correctly

• To calculate net income

• To prepare financial statements.

What does the Trial Balance not tell us?

• The financial health of a company

• The equality of debits and credits

• The correctness of journal entries

• The total revenue.

What happens if you increase one side of the accounting equation?

• The other side decreases

• The other side remains the same

• The other side also increases

• The equation becomes invalid.

What is the result of maintaining the integrity of the accounting equation?

• Imbalance in accounts

• Equality in Trial Balance

• Increase in liabilities

• Decrease in assets

What is the significance of the Trial Balance in accounting?

• It shows the financial health of a company

• It proves the correctness of journal entries

• It calculates net income

• It prepares financial statements.

What should be done to one side of an equation if you do something to the other side?

• Do nothing

• Do the opposite

• Do the same

• Ignore it

A __________ is a list of the balances on the accounts in the ledger at a certain date.

• Ledger

• Trial Balance

• Cash Book

• Purchase Book

A periodic report prepared by a business to test the equality of total debits and total credits in the ledger is called a(n)

• Balance sheet
• Income statement
• Cash flow statement
• Trial balance

Trial balance: Explain the difference between a trial balance and a balance sheet.

• A trial balance is prepared at the end of an accounting period, while a balance sheet is prepared at the beginning of an accounting period.

• A trial balance includes only assets and liabilities, while a balance sheet includes all income and expenses.

• A trial balance is used for internal reporting, while a balance sheet is used for external reporting.

• A trial balance lists all general ledger accounts and their balances, while a balance sheet is a financial statement showing a company's financial position.