A Trial Balance Is Prepared To

question 7

Multiple Choice

A trial balance is prepared to:

• A) act as a link between the journal and the ledger.
• B) determine profit or loss.
• C) verify the equality of debit and credit postings in the ledger.
• D) act as an index to the ledger.

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Definitions:

Inefficient

A condition or situation where resources are not used to their best potential, resulting in lost opportunities or wastefulness.

Asymmetric Information

A situation in which one party in a transaction has more or superior information compared to the other, potentially leading to imbalances in transactions and market failures.

Multi-Plant Firms

Companies that operate more than one production facility, often to increase output capacity or serve different geographic markets more efficiently.

Principal-Agent Framework

A theory that explores the challenges in motivations and conflicts of interest between a principal (such as an owner) and an agent (such as an employee) acting on the principal's behalf.