Tag: preparation of trial balance

Quizzes (0) Questions (86)

Questions Related to 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

Income Tax appears in trial balance ____________ column.

  1. debit balance

  2. credit balance

  3. L.F.

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

Income tax is a payment and expenses. Expense are always debited. Hence Income tax appears in trial balance debit column. 

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

Drawing account appears in ________ column of the trial balance.

  1. L.F

  2. debit balance

  3. credit balance

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

Drawing is a personal withdrawal done by the proprietor. All personal drawings are debited to the drawing account. 

Drawing account will always have a debit balance. Drawing account must be shown in the debit side 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

State whether  the following statements are True or False:
The total of purchase book casts short by Rs.1,000/- will not affect the trial balance.

  1. True

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

If the purchase book is cast short, the total posted to the Purchases account is understated. This creates an imbalance in the trial balance because the debit side will be less than the credit side.

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

State whether  the following statements are True or False:
Preparation of trial balance helps in locating an error of principle.

  1. True

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

A trial balance is a statement showing the balances, or total of debits and credits, of all the accounts in the ledger with a view to verify the arithmetical accuracy of posting into the ledger accounts. Trial balance is an important statement in the accounting process, which shows final position of all accounts and helps in preparing the final statements.

When a trial balance does not tally (that is, the totals of debit and credit columns are not equal),  at least one error has occurred. The error (or errors) may have occurred at one of those stages in the accounting process: (1) totaling of subsidiary books, (2) posting of journal entries in the ledger, (3) calculating account balances, (4) carrying account balances to the trial balance, and (5) totaling the trial balance columns. 
Hence, preparation of trial balance helps in locating errors, not only error of principle.

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

State whether the following statements are True or False.
In Trial balance Opening Stock is recorded in credit balance column.

  1. True

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

Opening stock is an asset and represents a debit balance. Therefore, it is recorded in the debit column of 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

State whether the following statement is True or False.
Capital balance is not included in a trial balance.

  1. True

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

Trial Balance is a list of closing balances of ledger accounts on a certain date and is the first step towards the preparation of financial statements. It is usually prepared at the end of an accounting period to assist in the drafting of financial statements. Ledger balances are segregated into debit balances and credit balances. Asset and expense accounts appear on the debit side of the trial balance whereas liabilities, capital and income accounts appear on the credit side. If all accounting entries are recorded correctly and all the ledger balances are accurately extracted, the total of all debit balances appearing in the trial balance must equal to the sum of all credit balances.

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

State whether the following statement is True or False.
Trial balance is prepared on a separate sheet of paper.

  1. True

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

A trial balance is a statement prepared on a separate sheet of paper to check the arithmetical accuracy of the ledger 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

State whether the following statement is True or False.
Net trial balance is more popular than gross trial balance.

  1. True

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

The net trial balance (or balance trial balance) is more commonly used in practice because it is concise and easier to use for preparing financial statements.

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

State whether the following statement is True or False.
Closing stock usually does not appear in the trial balance.

  1. True

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

Closing stock is an adjustment made at the end of the accounting period. It is usually determined after the trial balance is prepared, so it does not appear in it.