Question

Which of the following statements about the unadjusted trial balance is not correct? 

• You can assume that no errors were made In the recording of transactions if total debits equal total credits on the unadjusted trial balance 

• A trial balance shows the ending balances obtained from the ledger Isted in either the debit or credit column. 

• A trial balance lists every account name in one column, usually, in the order of assets, liabilities, stockholders' equity, revenues, and expenses 

• A trial balance is an internal report used to determine whether total debits equal total credits

Answer 1

Answers

• The correct answer is Option #1: You can assume that no errors were made in the recording of transactions if total debits equal total credits on the unadjusted trial balance is NOT correct statement about the unadjusted trial balance.
• This is because, even if both the sides – debit and credit side total is the same, there can be possibility of various errors, and we cannot assume that there are no errors.
• Following kinds of error will not lead to any difference in trial balance debit and credit total. Totals will be same but there will be errors.
  These are:
  --Wrong account debited/credited: For example, sales made on account is debited to Cash account (instead of Accounts receivables account) and credited to Sales Revenue account. The debits and credit side total WILL STILL MATCH.
  --Errors of omission – Whole transaction got missed from being journalised and posted to T account.
  --Compensatory errors.