The Accounting Information System - Trial Balance and Financial Statements

Question 1

What does the business prepare after recording the transactions in the journals and posting them to the respective ledgers?

Answer 1

The business will prepare a Trial Balance, i.e. summary of the balances of each ledger account in the General Ledger as at a specified date.

Question 2

What is a Trial Balance?

Answer 2

It is a two-column schedule showing account titles with the debit balances and the credit balances of all the accounts in the ledger at a given date. See Page 106 for a sample Trial Balance.

Question 3

What is the purpose of the Trial Balance? /

What is the use of the Trial Balance?

Answer 3

It is used to check for any arithmetic error that may have occurred.

Question 4

Which chapter in the textbook will show me how a Trial Balance is prepared?

Answer 4

Chapter 8

Question 5

What happens after a Trial Balance shows that there are no arithmetic errors in the accounts?

Answer 5

The financial statements, i.e. the Income Statement and the Balance Sheet are prepared. (Chapters 9 and 10 of textbook.)