Trial Balance quiz #1 Flashcards
Trial Balance quiz #1
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What is a T account and how is it structured?
A T account is a tool used to summarize transactions for individual accounts, showing debits on the left, credits on the right, and the account title at the top. How do you determine the final balance in a T account?
Sum all debits and subtract all credits for the account; the result is the final balance, which will be a debit or credit depending on which side is greater. What type of balance do asset accounts typically have?
Asset accounts typically have a debit balance. What type of balance do liability accounts typically have?
Liability accounts typically have a credit balance. What is the purpose of a trial balance?
A trial balance lists all accounts and their final balances to verify that total debits equal total credits, ensuring the accuracy of accounting records. In what order are accounts listed on a trial balance?
Accounts are listed in the order of assets, liabilities, equity, revenue, and expenses. What does it mean if the trial balance does not balance?
If the trial balance does not balance, it indicates an error in the accounting records that needs to be corrected. What is an unadjusted trial balance?
An unadjusted trial balance is a list of all account balances before any adjusting entries are made. How is the trial balance used in preparing financial statements?
The trial balance provides the account balances needed to prepare the balance sheet, income statement, and cash flow statement. What is the effect of a debit entry on an asset account?
A debit entry increases an asset account. What is the effect of a credit entry on a liability account?
A credit entry increases a liability account. What is the effect of a credit entry on an asset account?
A credit entry decreases an asset account. What is the effect of a debit entry on a liability account?
A debit entry decreases a liability account. What is the normal balance for a revenue account?
The normal balance for a revenue account is a credit. What is the normal balance for an expense account?
The normal balance for an expense account is a debit. Why is it important for total debits to equal total credits in the trial balance?
It ensures that the double-entry accounting system is correctly applied and that the books are in balance. What does a credit balance in the cash account indicate?
A credit balance in the cash account would indicate negative cash, which is unusual and likely an error. What is the role of adjusting entries in relation to the trial balance?
Adjusting entries update account balances to reflect accrued and deferred items, leading to an adjusted trial balance. What is the difference between an unadjusted and an adjusted trial balance?
An unadjusted trial balance is prepared before adjusting entries, while an adjusted trial balance is prepared after adjustments to reflect accurate balances. How are dividends recorded in the trial balance?
Dividends are recorded as a debit, reducing equity. What is the normal balance for a common stock account?
The normal balance for a common stock account is a credit. How do you check for errors using the trial balance?
By ensuring that total debits equal total credits; if not, an error has occurred. What is the impact of paying wages on the trial balance?
Paying wages increases wage expense (debit) and decreases cash (credit). How is accounts receivable affected when cash is collected from customers?
Accounts receivable is credited (decreased) and cash is debited (increased). What does the trial balance help prepare?
The trial balance helps prepare the balance sheet, income statement, and cash flow statement. What is the normal balance for the supplies account?
The normal balance for the supplies account is a debit. How is land recorded in the trial balance?
Land is recorded as an asset with a debit balance. What does a credit in accounts payable represent?
A credit in accounts payable represents an increase in the company's liabilities. Why are revenue and expense accounts listed separately in the trial balance?
They are listed separately to show the components of equity before closing entries are made. What is the significance of the line drawn under the final balance in a T account?
The line indicates the end of transactions and the final balance for that account. What does it mean if an account has more credits than debits?
It means the account has a credit balance, typical for liabilities, equity, and revenue accounts. What is the first step in preparing a trial balance?
The first step is to determine the final balance of each account using T accounts or ledger balances.
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