Q16RQ - Horngren'S Financial And Managerial Accounting

Question

If total debits equal total credits on the trial balance, is the trial balance error-free? Explain your answer.

Step-by-Step Solution

Answer

There could be an error in the trial balance even if the debits and credits are equal.

Step 1: Definition of Trial Balance

A trial balance is a worksheet in which the balances of ledger accounts are shown on the debit or credit side.

Step 2: Error in the trial balance, even debits and credits are equal

If the total debits and the total credits are equal in the trial balance, there could still be an error. Example compensating errors, like the account of Louis, an individual needs to be debited, but the account of Louie is debited.

So these mistakes compensate for each other and do not affect the accuracy of the trial balance.