Practice Quiz

RTRP - IRS Registered Tax Return Preparer Test

Category - Accounting

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Bart’s Brewskies is considering firing their new accountant. Bart misclassified one of his expenses and even though Bart was the one who made the error, he says the accountant should have caught it when he prepared the trial balance. Is he correct?
  1. No. He’s wrong.
  2. Yes. He’s correct.
  3. There’s not enough information to answer the question.
  4. It depends upon how much the expense was.
  5. Bart was sampling the stock again and didn’t know what he was talking about.
Explanation
Answer - A - Bart is incorrect. The trial balance will not show a misclassified expense. It only shows that debits and credits are equal or balanced.

Key Takeaway: The trial balance is prepared to detect math errors that have occurred when using a double-entry accounting system. As long as the total debits are equal to the total credits, it is balanced. It does not detect any issues with misclassifying transactions, as the balance would not be affected.
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