How can a transposition error be detected in a trial balance?

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A transposition error occurs when two digits are reversed in a number, which can lead to inaccuracies in the financial data presented in the trial balance. The statement that unequal balances on both sides indicate a transposition error is accurate because a trial balance is meant to show that total debits equal total credits. If the totals do not match, it indicates that either a mistake was made in recording amounts or errors may have occurred in the process of accounting.

When there is a transposition error, the resulting figures will not balance since the incorrect number is used in the calculations. For instance, if an amount of $540 was recorded as $450, the difference in totals would reflect as a mismatch or unequal total, which can signal that a transposition might have taken place.

Identifying this discrepancy is critical as it prompts further investigation into resulting entries, leading the accountant to review the ledger or individual entries to uncover the source of the error. Conversely, while other options focus on aspects like overall errors or ledger confirmations, they may not specifically indicate a transposition issue as directly as the concept of unequal balances does.

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