Trial balance : Practice Questions

What does the agreement of a trial balance primarily indicate in the accounting process?

Which of the following statements regarding a trial balance are correct?

(1) It proves the arithmetical accuracy of the ledger.
(2) It helps in the preparation of financial statements.
(3) It identifies errors of principle and errors of original entry.
(4) It is a part of the double-entry system.

When preparing a trial balance, which of the following describes the limitation concerning an error of commission?

Which of the following errors would NOT be revealed by a trial balance?

Rainbow Stationery is a retail business. On 31 December 2024, the bookkeeper extracted the following ledger balances to prepare a trial balance:

Account Title: Office Equipment (at cost) | Amount: \( \$50,000 \)
Account Title: Inventory (1 January 2024) | Amount: \( \$12,000 \)
Account Title: Trade Receivables | Amount: \( \$18,500 \)
Account Title: Trade Payables | Amount: \( \$14,200 \)
Account Title: Bank Overdraft | Amount: \( \$4,000 \)
Account Title: Capital (1 January 2024) | Amount: \( \$47,300 \)
Account Title: Sales | Amount: \( \$120,000 \)
Account Title: Purchases | Amount: \( \$82,000 \)
Account Title: Returns Inwards | Amount: \( \$1,500 \)
Account Title: Returns Outwards | Amount: \( \$2,100 \)
Account Title: Carriage Inwards | Amount: \( \$800 \)
Account Title: Carriage Outwards | Amount: \( \$1,200 \)
Account Title: General Expenses | Amount: \( \$18,600 \)
Account Title: Drawings | Amount: \( \$3,000 \)

Required:
(a) Prepare the Trial Balance for Rainbow Stationery as at 31 December 2024. (4 points)
(b) State and briefly explain two types of errors that would not cause the trial balance totals to disagree. (2 points)

Titan Systems is a small trading business. The following balances were extracted from its ledger on 31 December 2023. However, the accountant discovered several errors before the final trial balance was completed. The Capital balance as at 1 January 2023 has not yet been determined.

Additional Information:

(i) A credit sale of \( \$2,500 \) was correctly recorded in the Sales account but was mistakenly debited to the Trade Payables account.

(ii) A payment for equipment repairs of \( \$1,200 \) was wrongly debited to the Equipment account.

(iii) The total of the Purchases Journal was overcast by \( \$1,000 \).

(iv) The owner took goods costing \( \$800 \) for personal use, but no entry had been made in the books.

Required:

(a) Briefly explain two functions of a trial balance. (2 points)

(b) Prepare the corrected Trial Balance for Titan Systems as at 31 December 2023, showing the corrected balances for each account and calculating the balancing figure for Capital. (6 points)