Multiple Choice
1. Which of the following statements about the trial balance columns of a worksheet is correct?
1
views
2. Transaction Analysis
Trial Balance
Multiple Choice
Based on the trial balance spreadsheet below, which of the following statements is true? | Account | Debit (\() | Credit (\)) | |-------------------|-----------|------------| | Cash | 5,000 | | | Accounts Payable | | 2,000 | | Service Revenue | | 3,000 | | Salaries Expense | 1,000 | | | Common Stock | | 1,000 | A. The total debits equal the total credits. B. The trial balance is out of balance by \$1,000. C. The total credits exceed the total debits by \$2,000. D. The trial balance is out of balance by \$500.
A
D. The trial balance is out of balance by \$500.
B
B. The trial balance is out of balance by \$1,000.
C
A. The total debits equal the total credits.
D
C. The total credits exceed the total debits by \$2,000.
Verified step by step guidance1
Step 1: Understand the purpose of a trial balance. A trial balance is a tool used to ensure that the total debits equal the total credits in a company's accounting records. If they do not match, it indicates an error in the accounting process.
Step 2: Identify the debit and credit columns in the trial balance provided. The debit column includes Cash (\$5,000) and Salaries Expense (\$1,000), while the credit column includes Accounts Payable (\$2,000), Service Revenue (\$3,000), and Common Stock (\$1,000).
Step 3: Calculate the total debits by summing the values in the debit column. Use the formula: . This gives the total debits.
Step 4: Calculate the total credits by summing the values in the credit column. Use the formula: . This gives the total credits.
Step 5: Compare the total debits and total credits. If the totals are not equal, calculate the difference between the two using the formula: . This will help determine whether the trial balance is out of balance and by how much.
Related Videos
Related Practice
