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    Question

    A trial balance is an internal financial report, critical to the book-keeping and accounting process. What purpose does a trial balance serve?

    A Record all financial transactions of the company Correct Answer Incorrect Answer
    B Record all financial transactions of the company Correct Answer Incorrect Answer
    C Ensure accuracy of accounting records of the company Correct Answer Incorrect Answer
    D Ensure accuracy of accounting records of the company Correct Answer Incorrect Answer
    E Calculate the tax liability of the company for presentation in the income tax return Correct Answer Incorrect Answer

    Solution

    A trial balance is a book-keeping or accounting report that lists the balances in each of the company's general ledger accounts.  Since accounting is done on a double-entry system, the total of debit and credit balances should be equal. A disagreement in the trial balance indicates an error and therefore a trial balance helps in checking the arithmetic accuracy of preparation of accounts.

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