Question

The trial balance would automatically reveal the following error: Land was purchased for cash but instead of crediting cash, the credit was made to Accounts Receivable.

a. True
b. False

Answer 1

b. False

Step-by-step explanation:

The trial balance shows the total debit and credit balances of individual accounts in a company's books. It shows all the balances of the assets, liabilities, income and expenses in two columns; debits and Credits.

A trial balance can only show an error where the debits and credit balances are not equal.

A credit to account receivables that should have been posted to the cash account would understate the receivables account but overstate the cash account. However, these are two assets accounts. As such, the trial balance would not detect this as the debits and credits would still be equal.

The right option is b. False