2021 · Q106
Which one of the following statements about Trial Balance is correct?
General Accounting Principles, Auditing and InsuranceRecording transactions
- AIt is a book containing different accounts of an entity.
- BIt is a statement containing balances of debtors of an entity.
- CIt is a statement containing balances of debtors and creditors of an entity.
- DIt is a statement containing the various ledger balances of an entity particular date.
Explanation
A trial balance is a financial statement that lists all the ledger account balances of a business at a specific point in time, usually at the end of an accounting period, such as a month or a year. The purpose of a trial balance is to ensure that the total debits of all accounts equal the total credits of all accounts, which is a fundamental principle of double- entry bookkeeping.