Multiple Choice
Which of the following best describes the purpose of the adjusted trial balance prepared by Blueboy Cheese Corporation as of December 31, 2024?
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2. Transaction Analysis
Trial Balance
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Which of the following best describes the purpose of a trial balance in financial accounting?
A
To ensure that total debits equal total credits in the ledger accounts.
B
To record all business transactions in chronological order.
C
To prepare the financial statements directly without further adjustments.
D
To determine the net income or loss for the accounting period.
Verified step by step guidance1
Understand the concept of a trial balance: A trial balance is a financial accounting tool used to ensure that the total debits equal the total credits in the ledger accounts. It is prepared at the end of an accounting period to check the accuracy of the bookkeeping process.
Analyze the options provided: Review each option and determine whether it aligns with the purpose of a trial balance. For example, recording transactions in chronological order is the purpose of a journal, not a trial balance.
Eliminate incorrect options: The trial balance does not directly prepare financial statements or determine net income or loss. These tasks require additional adjustments and processes, such as preparing adjusting entries and financial statement formats.
Focus on the correct purpose: The trial balance is specifically designed to verify the equality of debits and credits, ensuring that the ledger accounts are balanced and free from arithmetic errors.
Conclude the correct answer: Based on the analysis, the correct description of the purpose of a trial balance is 'To ensure that total debits equal total credits in the ledger accounts.'
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