The Trial Balance

A firm's trial balance . . .

• shows its financial position.

• establishes whether its accounting records are correct.

• lists all of the entries in its double-entry accounting records.

• is a list of all of the balances brought down in its double-entry accounting records.

The purpose of a firm preparing a trial balance is to establish whether . . .

• the total of the debit balances brought down in its nominal (general) ledger equals that of the credit balances brought down.

• the double-entry record it has made for all transactions is correct.

• its bank balance is correct.

• it has earned a profit or incurred a loss.

The debit and credit totals of a trial balance . . .

• need not always agree, as there are sometimes legitimate reasons why they should differ.

• should agree in all cases except when the trial balance is prepared at the end of an accounting period.

• should always agree.

• need not always agree, because the trial balance is not the same as a balance sheet.

An error of omission arises when . . .

• either the debit entry or the credit entry for a particular transaction is recorded in the wrong class of ledger account.

• a transaction is not entered at all in the nominal (general) ledger.

• a correct figure is entered in the double-entry accounting records, but in the wrong person's account.

• two errors are made, one of which cancels out the other.

An error of commission arises when . . .

• either the debit entry or the credit entry for a particular transaction is recorded in the wrong class of ledger account.

• a transaction is not recorded in the double-entry accounting records.

• a correct figure is entered in the double-entry accounting records, once in the correct ledger account and once in the wrong person's account.

• None of the above.

In the case of a newsagent's shop, which of the following is an error of principle ?

• The cost of purchasing a photocopier on credit is entered on the debit side of the purchases account and on the credit side of the creditor's account.

• A sale is not recorded in the double-entry accounting records.

• A credit sale to A. Barker is entered on the credit side of the sales account and on the debit side of A. Baker's account.

• None of the above.

An error of original entry occurs when . . .

• either the debit entry or the credit entry for a particular transaction is recorded in the wrong class of account.

• a correct figure is entered in the double-entry accounting records, once in the correct ledger account and once in the wrong person's account.

• an incorrect figure is entered on the correct sides of the correct ledger accounts.

• None of the above.