It is the beginning of April and Comfy Home's accountant has gone away for a month to care for a sick family
member. Tenisa really wants to know how the business fared in the first quarter. She has decided to do some of the accounting work herself. She records a few journal entries and then prepares the trial balance and is pleased to find that it balances, so she believes everything is recorded correctly.
However, after completing the trial balance, Tenisa realizes she forgot to record $550 in gift card sales made on account to a long-time corporate client. She should have recorded the following two journal entries:
Date Account Debit Credit
18-Feb-18 Accounts Receivable $ 200
Deferred revenue $ 200
7-Mar-18 Accounts Receivable $ 350
Deferred Revenue $ 350
The trial balance provides a summary of all cash transactions, but since these gift card sales were made on account, the trial balance will not show the omission.
The trial balance provides a summary of transactions over a period of time, but since these gift card sales occurred outside that period of time, the trial balance will not show the omission.
The trial balance provides a check that the total of all debits equals the total of all credits, but since both the debit and the credit of the two entries were omitted, the trial balance will still balance.
The trial balance provides a check that all recorded transactions were recorded to the proper accounts, but since these transactions were omitted, the trial balance will not show the omission.
I hope the question is which of the following statement is true. The trial balance provides a summary of all cash... View the full answer