When debits do not equal credits on the trial balance, this indicates that the company has net income that needs to be transferred to the retained earnings account.

Question

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When debits do not equal credits on the trial balance, it indicates that there is an error in the accounting records. This could be due to a variety of reasons, such as a mathematical mistake or a transaction being recorded incorrectly. It does not necessarily indicate that there is net income that needs to be transferred to the retained earnings account.

When Debits Do Not Equal Credits on the Trial Balance