Question

Question 12 1 pts A trial balance is prepared directly from a company's general ledger O True O False Question 13 1 pts When a trial balance balances it means that the ending balances in the various accounts are correct. O True O False

Answer 1

Question 12. True. After finishing the Ledger posting, the next step of accounting is to prepare the trial balance. The trial balance is nothing but the closing balances of all the general ledgers put together.

Question 13. False. Trial Balance is prepared in order to verify whether all the debit balances matches with the credit balances thereby ensuring the concept of double entry system. It doen not ensure that th ending balances of various ledgers are correct.

The following are some of the errors due to which the ledger end balances will be wrong but the trial balance tallies.

a. Clerical Errors: The following are the types of Clerical errors:

1. Errors or omissions,
2. Errors of commission,
3. Errors of misposting, and
4. Compensating errors.

b. Errors of principles: If a revenue expense is recorded as a capital expenditure or vice-versa it is called the error of principle.