A Trial Balance Is Prepared To

question 72

Multiple Choice

A trial balance is prepared to:

• A) prove that there were no errors made in recording transactions into the journal.
• B) prove that postings to the ledger are made in accordance with GAAP.
• C) prove that each account balance is correct.
• D) summarize the account balances to help prepare financial statements.

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Definitions:

Average Inventory

Average Inventory is a calculation used to estimate the value or quantity of inventory that a business holds over a specific period, often used for analyzing inventory efficiency.

Net Present Value

The difference between the present value of cash inflows and outflows over a period of time, used to assess the profitability of an investment.

Cash Sales Policy

A cash sales policy is a company's strategy to require payment for goods or services at the time of sale, which can improve cash flow and reduce credit risk.

Net 30 Credit Policy

A payment term that allows the buyer 30 days to pay the invoice in full from the invoice date.