State the limitations of trial balance?
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trial balance is not a conclusive proof of accuracy there are many errors which may remain undetected even of the trial balance agree there are errors :-
•error of complete omission
•compensating error
•error of principle
•incorrect amount entered in journal entry
•An entry posted twice in ledger
•posting to the wrong account
•error of complete omission
•compensating error
•error of principle
•incorrect amount entered in journal entry
•An entry posted twice in ledger
•posting to the wrong account
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Answer:
A trial balance has some limitations :
It does not prove that all transactions have been recorded.
It does not prove that the ledger is correct.
Numerous errors may exist even though the trial balance columns agree.
It cannot find the missing entry from the journal.
It cannot find the missing entry from the ledger.
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