If a Trial Balance Is Not Equal, You Should First

question 106

Multiple Choice

If a trial balance is not equal, you should first

• A) re-compute the ledger balances.
• B) trace all postings.
• C) re-add the trial balance and calculate the difference.
• D) look for missing transactions.

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Definitions:

Capital Leases

Leasing agreements classified as purchases of assets for accounting purposes, due to their terms transferring substantial ownership rights to the lessee.

Sales-Type Leases

Leases where the lessor recognizes immediate profit on the transaction, similar to a sale, typically in equipment or vehicle leasing.

Direct-Financing Leases

Direct-Financing Leases are lease agreements where the lessor essentially acts as a financier, purchasing an asset and leasing it to the lessee, without assuming risk of ownership.

Capital Lease

A lease classified as a financial transaction where the lessee effectively buys an asset and finances it over the lease term.