What is the purpose of a Trial Balance in accounting?

To ensure that all transactions are recorded accurately.

To prepare financial statements.

To identify errors in recording transactions.

To calculate profit for the period.

If a Trial Balance doesn't balance, what does it indicate?

There are no errors in the accounts.

Some transactions were not recorded.

There is an error in recording transactions.

Financial statements cannot be prepared.

How are errors corrected when they are identified after preparing a Trial Balance?

By transferring to the Suspense Account.

What is the purpose of the Suspense Account?

To record transactions temporarily.

To correct errors in financial statements.

To transfer balances from one ledger to another.

To carry forward balances to the next accounting period.

How do errors in accounting affect the reported profit and financial position?

They affect the balance sheet only.

What happens to the Suspense Account balance once all errors are corrected?

It is transferred to the bank account.

It is transferred to retained earnings.

It is transferred to the cash account.

How does an error of principle differ from other types of errors?

It involves incorrect mathematical calculations.

It results from applying the wrong accounting policy.

It occurs due to omitting a transaction.

It results from entering a transaction in the wrong period.

What is the consequence of errors in financial reporting?

Misleading financial statements.

Only affects balance sheet items.

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