How is a Trial Balance used? Select an answer: It is an external document used to...

How is a Trial Balance used?

Select an answer:

It is an external document used to verify that the entries listed in the income statement have been properly tabulated.
It is a document provided to investors to indicate that accounts have been properly calculated.
It is an internal document that lists the balances across all of the company's accounting system.
It is a summary document of a company's financial transactions over a year.

Expert Solution

In double entry system of book keeping we have something known as a trial balance.

A trial balance is basically the summation of all the Debits and Credits of accounting heads, and since the debits would equial the credits , it balances out.

This is a basic tool of double entry book keeping, as the P&L and the Balance sheet for a period are derived from the trial balance. So step one would be to draw up the trial balance of all accounting heads, and step two would be the Financial statements preparation using the information in the trial balance.

It is a summary document of a company's financial transactions over a year.

jeff jeffy answered 1 year ago

what type of document is the budget? Internal or external?

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