SAP Business One Certification Practice Exam

True or False: The Trial Balance report is a draft of the Balance Sheet report.

1. True

2. False

3. Only for internal use

4. Only if formatted correctly

The correct answer is: False

The Trial Balance report serves as a summary of all ledger accounts, including their debit and credit balances, and is typically used internally to ensure that total debits equal total credits. It is an essential tool for accountants to identify any discrepancies in the accounting records before preparing final financial statements. The Balance Sheet, on the other hand, is a formal financial statement that presents the company’s financial position at a specific point in time, including assets, liabilities, and equity. While a Trial Balance provides foundational data that can lead to the creation of financial statements such as the Balance Sheet, it is not a draft or a precursor to the Balance Sheet itself. The reports serve different purposes—one is for internal accounting checks, while the other is for external reporting to stakeholders. This distinction highlights why the statement in question is false; the Trial Balance is not designed as a draft for the Balance Sheet, but rather as an intermediary tool for validating the entries in the accounting records before finalizing reports.