Question

Which of the following errors would cause the adjusted trial balance to be unequal? a.The adjustment for accrued fees of $16,340 was journalized as a debit to Accounts Payable for $16,340 and a credit to Fees Earned of $16,340. b.The adjustment for prepaid insurance was omitted. c.The adjustment for depreciation of $3,545 was journalized as debit to Depreciation Expense for $3,454 and a credit to Accumulated Depreciation of $3,545. d.The adjustment for unearned revenue was omitted.

Answer 1

Answer:

The answer is: B)The adjustment for prepaid insurance was omitted.

Explanation:

The adjusted trial balance is the last step before producing the financial statements of a company. Its format is identical to unadjusted balances, it has three columns: account names, debits and credits. The debit and credit columns are calculated at the bottom and should always be equal. If they aren’t equal, the trial balance was prepared incorrectly.

The only error that would cause the adjusted trial balance to be unequal (debts ≠ credits) is; The adjustment for prepaid insurance was omitted. Prepaid insurance should be debited and cash (or accounts payable) should be credited.