Questions: The trial balance is a financial statement that reports the assets, liabilities, and equity of a business at a point in time. True or False True False

The trial balance is a financial statement that reports the assets, liabilities, and equity of a business at a point in time. True or False True False
Transcript text: The trial balance is a financial statement that reports the assets, liabilities, and equity of a business at a point in time. True or False True False
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Solution

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Answer

The answer is False.

Explanation

The trial balance is not a financial statement that reports the assets, liabilities, and equity of a business at a point in time. Instead, it is a bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal. The purpose of a trial balance is to ensure that the entries in a company's bookkeeping system are mathematically correct.

Option 1: True

This option is incorrect because the trial balance is not a financial statement like the balance sheet or income statement. It is a tool used to verify that the total debits equal the total credits in the ledger accounts.

Option 2: False

This option is correct because the trial balance is a preliminary step in the preparation of financial statements, not a financial statement itself. It helps in identifying any discrepancies in the ledger accounts before the preparation of the actual financial statements, such as the balance sheet, which does report the assets, liabilities, and equity of a business at a point in time.

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