While preparing the trial balance you mistakenly list the ba

While preparing the trial balance you mistakenly list the balance of the Office Furniture account in the credit column. This account had a balance of $5,000. What would be the total amount of the discrepancy in the trial balance totals and why? Discuss the purposes of the trial balance?

Solution

Trial balance will show an error of $ 10,000 (double the mistake amount) as debit of $ 5,000 have been shown as credit side by $ 5,000.

The purpose of trial balance is to 1) list the balances of all the accounts with debit and credit balance 2) Ensure that both debit and credit balances when added is resulting into zero balance.