Trial Balance Quiz

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Questions and Answers

Which of the following best describes a trial balance?

  • A financial statement that shows the profit or loss of a company
  • A report that summarizes the cash inflows and outflows of a business
  • A document that lists all the accounts and their balances at a specific point in time (correct)
  • A record of all the transactions made by a company during a specific period

What is the purpose of a trial balance?

  • To calculate the net income of a company
  • To determine the cash flow of a business
  • To prepare financial statements
  • To check the accuracy of the accounting records (correct)

When is a trial balance prepared?

  • Throughout the accounting period
  • At the end of an accounting period (correct)
  • Only when requested by auditors
  • At the beginning of an accounting period

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Study Notes

Trial Balance Overview

  • A trial balance is a list of all general ledger accounts and their corresponding debit or credit balances.

Purpose of a Trial Balance

  • The purpose of a trial balance is to ensure the debit and credit columns are equal, confirming that the accounting equation (Assets = Liabilities + Equity) is in balance.

Preparation of a Trial Balance

  • A trial balance is typically prepared at the end of an accounting period, such as at the end of a month, quarter, or year, to prepare financial statements.

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