Which of the following is a common reason for discrepancies in a trial balance?
Practice Questions
1 question
Q1
Which of the following is a common reason for discrepancies in a trial balance?
Incorrect journal entries
Accrual accounting
Depreciation methods
Inventory valuation
Incorrect journal entries are a common reason for discrepancies in a trial balance, as they can lead to unequal debits and credits.
Questions & Step-by-step Solutions
1 item
Q
Q: Which of the following is a common reason for discrepancies in a trial balance?
Solution: Incorrect journal entries are a common reason for discrepancies in a trial balance, as they can lead to unequal debits and credits.
Steps: 5
Step 1: Understand what a trial balance is. A trial balance is a list of all the accounts in the accounting system with their balances.
Step 2: Know that in accounting, every transaction has a debit and a credit. These should always balance out.
Step 3: Realize that if there is a mistake in recording a transaction (like entering the wrong amount), it can cause the total debits and credits to be unequal.
Step 4: Identify that incorrect journal entries (like wrong amounts or wrong accounts) are a common reason for these mistakes.
Step 5: Conclude that when debits and credits do not match in the trial balance, it indicates there is a discrepancy that needs to be fixed.
