Podcast
Questions and Answers
Which of the following best describes the purpose of an unadjusted trial balance?
Which of the following best describes the purpose of an unadjusted trial balance?
- To list all general ledger accounts and their balances before any adjusting entries are made. (correct)
- To reconcile the company's bank statement with its accounting records.
- To provide a detailed analysis of all revenue and expense accounts.
- To present the final, adjusted financial position of a company at the end of an accounting period.
According to the AED/LIC framework, which of the following accounts would typically have a debit balance?
According to the AED/LIC framework, which of the following accounts would typically have a debit balance?
- Sales Revenue
- Trade Payables
- Utilities Expense (correct)
- Mortgage Loan
Joey Trading is preparing its trial balance. Which of the following is the correct way to present the company's name on the document?
Joey Trading is preparing its trial balance. Which of the following is the correct way to present the company's name on the document?
- Joey, Owner
- J.O. Trading
- Joey Trading (correct)
- Mr. Joey's Business
In the trial balance, which of the following accounts is correctly classified under the Debit column?
In the trial balance, which of the following accounts is correctly classified under the Debit column?
Which of the following accounts is correctly classified under the Credit column?
Which of the following accounts is correctly classified under the Credit column?
If the Debit column total in a trial balance is $550,000 and the Credit column total is $530,000, what does this discrepancy indicate?
If the Debit column total in a trial balance is $550,000 and the Credit column total is $530,000, what does this discrepancy indicate?
Discount allowed is similar to which other account appearing on the debit side?
Discount allowed is similar to which other account appearing on the debit side?
Sales return is the opposite to?
Sales return is the opposite to?
Which of these accounts is least likely to appear on a company's unadjusted trial balance?
Which of these accounts is least likely to appear on a company's unadjusted trial balance?
If a company’s total debits equal $600,000 and include $50,000 for drawings, what calculations must be true?
If a company’s total debits equal $600,000 and include $50,000 for drawings, what calculations must be true?
Flashcards
Unadjusted Trial Balance
Unadjusted Trial Balance
A trial balance that doesn't include any adjustments.
AED (Accounting)
AED (Accounting)
Assets, Expenses, and Drawings, which have a debit nature in accounting.
LIC (Accounting)
LIC (Accounting)
Liabilities, Income, and Capital, which have a credit nature in accounting.
Trade Receivables
Trade Receivables
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Sales Return
Sales Return
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Trade Payables
Trade Payables
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Cash at Bank Overdraft
Cash at Bank Overdraft
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Sales Revenue
Sales Revenue
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Trial Balance Equality
Trial Balance Equality
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Mortgage loan
Mortgage loan
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Study Notes
Trial Balance Preparation
- An unadjusted trial balance does not include any adjustments.
- Focus is on preparing an unadjusted trial balance.
Key Concepts Recap
- AED and LIC are important for trial balance preparation.
- AED (Assets, Expenses, Drawings) have a debit nature.
- LIC (Liabilities, Income, Capital) have a credit nature.
Trial Balance Format
- The company's name, not the owner's, is written first.
Example: Joey Trading Trial Balance
- Joey Trading is used as an example company.
- The trial balance date is as at December 31st, 20X2.
- Columns are labeled "Debit" and "Credit", with dollar signs.
Debit Column Items
- Motor vehicles are an asset and classified as debit.
- Trade receivables (amounts due from customers) are classified as debit.
- Land and building assets fall under debit.
- Utilities expense is an expense and is debit.
- Sales return is the opposite of income and is debit.
- Fixtures and fittings are assets, debit.
- Interest on loan is an expense and classified as debit.
- Cost of sales is classified as Debit.
- Cash in hand is a form of asset, debit.
- Discount allowed is an expense and in the debit column.
- Inventory is an asset and should be a debit.
- Wages expense is an expense and should be classified to debit.
Credit Column Items
- Trade payables (amounts owed to suppliers) are classified as credit.
- Mortgage loan is a liability, so it is credit.
- Cash at Bank Overdraft is a liability and is a credit.
- Discount received is credit in nature.
- Sales revenue is a form of income and should be classified as credit.
- Commission income is credit in nature.
- Capital is credit in nature.
Calculation and Balance
- Total debit amount should equal the total credit amount.
- In the example, the answer totals $551,250 on both sides.
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