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Preparation of Trial Balance Video Lecture - Commerce
FAQs on Preparation of Trial Balance Video Lecture - Commerce
| 1. What is a trial balance in commerce? |  |
Ans. A trial balance in commerce is a statement that lists all the ledger accounts and their balances to ensure that the total debit balances equal the total credit balances. It is prepared at the end of an accounting period to check the accuracy of the bookkeeping entries.
| 2. How is a trial balance prepared? | |
Ans. To prepare a trial balance, all the ledger accounts are listed, and their debit and credit balances are recorded in separate columns. The total of the debit column is calculated and compared to the total of the credit column. If both totals match, it indicates that the books are in balance.
| 3. What is the purpose of a trial balance? | |
Ans. The main purpose of a trial balance is to ensure the accuracy of the bookkeeping entries. By comparing the total debits and credits, any errors or discrepancies can be identified and corrected before the financial statements are prepared. It helps in detecting errors in recording transactions and maintaining the integrity of the accounting system.
| 4. What are the limitations of a trial balance? | |
Ans. While a trial balance is an important tool in accounting, it has certain limitations. It cannot detect errors of omission, where a transaction is completely missed. It also cannot detect errors of principle, where a transaction is recorded in the wrong account. Additionally, a trial balance cannot identify errors of original entry, where an incorrect amount is recorded for a transaction.
| 5. What happens if the trial balance does not balance? | |
Ans. If the trial balance does not balance, it indicates that there are errors in the bookkeeping entries. The accountant or bookkeeper needs to carefully review the ledger accounts and transactions to identify and correct the errors. Common errors that can cause the trial balance to not balance include incorrect posting, transposition errors, and mathematical mistakes.
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Dec 24, 2024 Last updated |
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