Which One of the Following Statements Regarding the Trial Balance

question 86

Multiple Choice

Which one of the following statements regarding the trial balance is true?

• A)A trial balance is included in the full set of external financial statements,just like an income statement.
• B)If debits equal credits in the unadjusted trial balance,you have made no errors in preparing and posting journal entries.
• C)The balances for each account reported on an unadjusted trial balance are determined by adding the amounts on the "+" side and subtracting the amounts on the "-" side of each ledger or T-account.
• D)GAAP allows companies to choose between the cash basis or the accrual basis of accounting.

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Definitions:

Double-Declining-Balance

A method of accelerated depreciation that doubles the straight-line depreciation rate and applies it to the reducing book value each year.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts, making the expense predictable.

Accounting Principles

Fundamental guidelines or rules that govern the financial reporting and accounting practices of companies, ensuring accuracy, consistency, and fairness in financial statements.

Prospectively

Prospectively means looking forward or considering future events, often used in accounting in terms of adopting new policies for future transactions.