BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -For a general ledger to be balanced, credits and debits must be equal. Debits increase asset, expense, and dividend accounts, while credits decrease them. Credits increase liability, revenue, and equity accounts, while debits decrease them.

Detailed explanation-2: -The totals of the debits and credits for any transaction must always equal each other, so that an accounting transaction is always said to be “in balance.” If a transaction were not in balance, then it would not be possible to create financial statements.

Detailed explanation-3: -If the total debits equal the total credits, the trial balance is considered to be balanced, and there should be no mathematical errors in the ledgers. However, this does not mean that there are no errors in a company’s accounting system.

Detailed explanation-4: -If the sum of debits does not equal the sum of credits, an error has occurred and must be located. Businesses prepare a trial balance regularly, usually at the end of the reporting period to ensure that the entries in the books of accounts are mathematically correct.