ACCA Financial Accounting (F3) Certification 2025 – 400 Free Practice Questions to Pass the Exam

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What is the primary purpose of preparing a trial balance?

To identify errors in the ledger accounts.

To confirm the accuracy of the financial statements.

To ensure that debit and credit entries balance.

The primary purpose of preparing a trial balance is to ensure that the total debits equal the total credits in the accounting records. This process is fundamental to double-entry bookkeeping, where each transaction affects both sides of the ledger—debits must always equal credits. When the trial balance is prepared, it serves as a check to confirm that the accounting entries have been recorded correctly and no fundamental discrepancies exist at this stage.

This balancing act is crucial because if the debits and credits do not match, it indicates that there may be errors in the recording process that need to be investigated before proceeding to prepare financial statements. While the trial balance may also assist in identifying errors and provide a foundation for constructing the financial reports, its primary function is to confirm that the entries in the ledgers are balanced, making it an essential step in the accounting cycle.

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To provide information for preparing financial reports.

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