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Objectives of Preparing the Trial Balance Video Lecture | Accountancy Class 11 - Commerce

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FAQs on Objectives of Preparing the Trial Balance Video Lecture - Accountancy Class 11 - Commerce

1. What is the purpose of preparing a trial balance?
Ans. The purpose of preparing a trial balance is to ensure the accuracy of the financial records. It helps in identifying and rectifying any errors or discrepancies in the bookkeeping process. By comparing the total debits and credits of all accounts, a trial balance provides a snapshot of the company's financial position at a specific point in time.
2. How is a trial balance prepared?
Ans. To prepare a trial balance, all the ledger accounts are listed along with their debit and credit balances. The total of all debit balances is calculated and compared to the total of all credit balances. If the totals match, the trial balance is considered balanced, indicating that the accounting entries are accurate. If the totals do not match, it indicates an error that needs to be identified and corrected.
3. Can a trial balance guarantee the absence of errors in the financial statements?
Ans. No, a trial balance cannot guarantee the absence of errors in the financial statements. While a balanced trial balance indicates that the debits and credits are equal, it does not ensure that there are no errors in the individual accounts. Mistakes such as recording incorrect amounts or posting entries to the wrong accounts can still occur, resulting in an inaccurate financial statement.
4. 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 accounting records. The most common types of errors include the omission of an entry, incorrect recording of amounts, or posting entries to the wrong accounts. To identify the error, accountants need to review the ledger accounts and trace the transactions to find where the mistake occurred. Once identified, the error can be corrected, and a new trial balance can be prepared.
5. Is a trial balance prepared only at the end of the accounting period?
Ans. No, a trial balance can be prepared at any time during the accounting period. While it is commonly prepared at the end of the period to assist in the preparation of financial statements, it can also be prepared as an internal control measure to detect errors on a regular basis. Mid-month or quarterly trial balances can help identify and rectify errors promptly, ensuring the accuracy of the financial records throughout the accounting period.
82 videos|105 docs|42 tests

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