Tag: trial balance

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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

The preparation of a trial balance helps in locating ______________.

  1. Errors in Principle

  2. Errors of Omission

  3. Clerical Errors

  4. Compensatory Errors
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

While recording the transaction, there is a possibility of having the error. Since accounting is based on double entry system, for every debit there will be a credit. Hence at any point of time, trial balance must be tallied. If trial balance dose not matches, there must be some clerical error.

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

From the point of view of the lessee, a lease is a:

  1. Working capital decision

  2. Financing decision

  3. Buy or make decision

  4. Investment decision
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Lease is a financing decision because investment is something from where you are will get back some returns in future. In leasing there is no return rather lessee is paying lease rentals per month. Moreover, lessee gets immediate access to the assets. It has tax benefits.

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

Extract of trial balance of Mr. Q is as follows:

Particulars Dr. Rs Cr. Rs
Sundry debtors 1,00,000 -
Sundry creditors - 78,000

Additional information:
Included in sundry debtors Rs 5,000 due from Mr A. Included in sundry creditors Rs 2,000 payable to Mr. A.
Sundry debtors and creditors will appear in balance sheet at Rs _________ & Rs ____________.

  1. 97,000, 75,000

  2. 98,000, 76,000

  3. 95,000, 76,000

  4. 98,000, 72,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Mr. A is a common person which is included in Sundry Debtors and Sundry Creditors. A common amount of Rs.3000 has to be adjusted from sundry debtors and sundry creditors to show the net balance in the balance sheet. 

This will be presented as:
                                                       Sundry Debtors                Sundry Creditors
Amount as per trial balance:         Rs.100000                         Rs.78000
Less: Amount due to/from Mr. A   Rs.  3000                           Rs.  3000
                                                       ---------------------------        ---------------------------
Net Balance to be shown in B/S    Rs.97000                        Rs.75000
                                                       --------------------------         ---------------------------

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

If the trial balance do not agree after transferring the balance of ledger accounts including cash and bank balance and also errors are not located timely, then the trial balance is tallied by transferring the difference of debit and credit side to an account known as - 

  1. Memorandum Account

  2. Capital Account

  3. Suspense Account

  4. Drawing Account
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Trial balance is prepared to check and confirm the posting of all accounting entries. Trial balance is prepared with the help of ledger account. All the balances from each of ledger account is taken in a list in the debit and credit column. Both the sides of trial balance must be equal as accounting is based on the double entry system of accounting. 

If the trial balance do not agree and errors not located before the finalization of accounts, the difference amount has to be transferred to suspense account.

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

Closing stock appearing in trial balance will be taken to _____________.

  1. Trading account only

  2. Balance sheet only

  3. Trading account and balance sheet

  4. Profit & loss account only
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

At the end of the financial year, while closing the books of account there are certain adjustment entries need to be passed by debiting/crediting  the trading account or profit & loss account. Entry for closing stock will be passed as: 


Closing Stock A/c                     Dr.
      To Trading Account

In the above situation, closing stock appearing in the trial balance will be taken to balance sheet.
Items that are shown in trial balance are recorded only once.

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

Cash account appearing in Trial balance is transferred to __________.

  1. balance sheet asset side

  2. balance sheet liability side

  3. trading account

  4. profit and loss account
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Cash Account is a real account and part of assets. All assets account are shown in the balance sheet. Cash is a current assets and shown in current assets in the balance sheet. 

Multiple choice elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

State whether the following statement is True or False.
In trial balance purchases returns are recorded on Debit side.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Purchases returns (or return outwards) represent a reduction in purchases. Since purchases are debited, purchases returns are credited in the ledger and thus appear on the credit side of the trial balance.

Multiple choice elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

From the following particulars of Mrs. Dropadi Ltd., 
i) Monthly cash requirements =Rs.60,000
ii) Fixed cost per transaction = Rs.10. 
iii) Interest rate on marketable securities =  $6\%$ p.a.
Calculate the optimum cash balance of the company .

  1. Rs.60,000

  2. Rs.16,000

  3. Rs.15,000

  4. Rs.30,000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Optimum cash balance
 = $\sqrt\frac{2b \ T}{I}$
 = $\sqrt\frac{2 X 10 X 60,000}{.005}$
= Rs. 15,492 or Rs.15,000
I = $6\%$ p.a. or $0.5\%$ per month or = .005.

Multiple choice elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

If 'Prepaid Wages' is given in Trial Balance,it is shown in_______________.

  1. Debit of Trading A/c

  2. Debit of Trading A/c and Assets side of B/S

  3. Debit of P & L A/c

  4. Asset side of the B/S
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Wages are an obligation on the part of the company. When an obligation is met in advance its a right. Hence, wages paid in advance is a right and a right is an asset of the company.  

Multiple choice elements of accounts trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Apprenticeship Premium received appearing in the Trial Balance are shown:

  1. on the debit side of Profit and Loss A/c

  2. on the credit side of Profit and Loss A/c

  3. on the Assets side of the Balance Sheet

  4. on the liabilities side
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Apprenticeship premium received is an income for the business. All incomes are credited to the Profit and Loss account.