1. What proof is provided by a trial balance?
2. If the two totals of a trial balance are equal, does it mean that there are no errors in the accounting records? Explain.
3. Assume that when a purchase of supplies of $1,030 for cash was recorded, both the debit and the credit were journalized and posted as $1,300. (a) Would this error cause the trial balance to be out of balance? (b) Would the trial balance be out of balance if the $1,030 entry had been journalized correctly, but the credit to Cash had been posted as $1,300?
4. Banks rely heavily upon customers' deposits as a source of funds. Demand deposits normally pay interest to the customer, who is entitled to withdraw at any time without prior notice to the bank. Checking and NOW (negotiable order of withdrawal) accounts are the most common form of demand deposits for banks. Assume that LaDuke Storage has a checking account at City Savings Bank. What type of account (asset, liability, stockholders' equity, revenue, expense, dividends) does the account balance of $15,500 represent from the viewpoint of (a) LaDuke Storage and (b) City Savings Bank?