Tag: trial balance

Quizzes (2) Questions (86)

Questions Related to trial balance

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

A lease which is generally not cancellable and covers full economic life of the asset is known as:

  1. Sale and Leaseback

  2. Operating Lease

  3. Finance Lease

  4. Economic Lease
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Capital lease is a lease agreement in which the lessor agrees to transfer the ownership rights to the lessee after the completion of the lease period. Capital or finance leases are long term and non cancellable in nature.

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Lease which includes a third party (a lender) is known as:

  1. Sale and Leaseback

  2. Direct Lease

  3. Inverse Lease

  4. Leveraged Lease
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A leveraged lease is a lease agreement that is financed through the lessor with help from a third-party financial institution. In a leveraged lease, an asset is rented with borrowed funds.

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Under the provisions of AS-19 'Leases', a leased asset is shown in the balance sheet of:

  1. Manufacturer

  2. Lessor

  3. Lessee

  4. Financing bank
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The liability component is reported in the liabilities section of the balance sheet as a "capital lease" line item. The amount is equal to the discounted present value of the lease payments over the lease term plus any interest accrued between the previous lease payment and the balance sheet date.

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Most widely used method in preparation of trial balance is __________.

  1. Balances method

  2. Totals method

  3. Totals-cum-balances method

  4. All of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Trial balance can be prepared in three ways:


1) Total cum balance method- In this method, total and balances both are captured in tabular form. 
2) Total Method- In this method, total of debit and credit are incorporated in the tabular form.
3) Balance method- In this method, only balances are taken in the trial balance.  This method is most widely used for preparation of trial balance.

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Risk-Return trade off implies:

  1. Minimization of Risk

  2. Maximization of Risk

  3. Ignorance of Risk

  4. Optimization of Risk
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The risk-return tradeoff states that the potential return rises with an increase in risk. Using this principle, individuals associate low levels of uncertainty with low potential returns, and high levels of uncertainty or risk with high potential returns.

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Name the methods in which trial balance can be prepared.

  1. Totals-cum-balances Method.

  2. Totals Method.

  3. Balances Method.

  4. All of the above.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Trial balance can be prepared in three ways:


1) Total cum balance method- In this method, total and balances both are captured in tabular form. 
2) Total Method- In this method, total of debit and credit are incorporated in the tabular form.
3) Balance method- In this method, only balances are taken in the trial balance. 

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Which of the following is not true for a Lease decision for the lessee?

  1. Helps in project selection

  2. Helps in project financing

  3. Helps in project location

  4. All of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Lease decisions are primarily about financing (choosing between leasing or buying). While they affect financial strategy, they do not inherently help in project selection or location, which are strategic business decisions.

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Totals method does not help in assuming _________of balances of various accounts.

  1. Total of each side in the ledger

  2. Application of double entry system

  3. Accuracy

  4. None of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Totals method is not in use widely as it does not determines the accurate balances of the accounts and thus, also does not help in the preparation of the Financial statements or final accounts.

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Basic objective of diversification is:

  1. Increasing Return

  2. Maximising Return

  3. Decreasing Risk

  4. Maximizing Risk
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Diversification aims to maximize returns by investing in different areas that would each react differently to the same event. Most investment professionals agree that, although it does not guarantee against loss, diversification is the most important component of reaching long-range financial goals while minimizing risk.

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Goodwill account appears on _____________ side of Trial Balance.

  1. debit

  2. credit

  3. both sides

  4. none of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Fixed assets are classified as tangible and intangible assets. All the assets will always show a debit balance.
Goodwill is a type of an intangible fixed asset which is shown in the balance sheet under the fixed assets. Such an item will always show a debit balance as it is an asset for the business entity.