Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

2. Transaction Analysis

Trial Balance

Financial Accounting

2. Transaction Analysis

Trial Balance

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Multiple Choice

Which of the following best describes the purpose of preparing a trial balance as of May 31?

To record all transactions that occurred during the month of May.

To prepare financial statements directly without further adjustments.

To verify that total debits equal total credits in the ledger accounts at a specific date.

To determine the net income or loss for the period ending May 31.

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Verified step by step guidance

Understand the concept of a trial balance: A trial balance is a bookkeeping worksheet in which the balances of all ledger accounts are compiled into debit and credit columns to ensure that the accounting entries are mathematically correct.

Clarify the purpose of a trial balance: The primary purpose of preparing a trial balance is to verify that the total debits equal the total credits in the ledger accounts at a specific date. This ensures the accuracy of the double-entry accounting system.

Eliminate incorrect options: Review each option provided in the problem and determine whether it aligns with the purpose of a trial balance. For example, recording transactions or preparing financial statements directly are not the purposes of a trial balance.

Focus on the correct option: The correct purpose of a trial balance is to verify the equality of debits and credits, which helps identify any errors in the ledger accounts before proceeding to adjustments or financial statement preparation.

Conclude the reasoning: By ensuring that total debits equal total credits, the trial balance serves as a preliminary check for accuracy in the accounting records, but it does not guarantee the absence of all errors (e.g., errors of omission or incorrect account classification).