Trial Balance and Rectification of Errors Test 19

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Trial Balance and Rectification of Errors Test 19

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Question 1
1 / -0

A ______ is a schedule or list of balances of both debit and credit extracted from various accounts.

A
Profits & Loss Account

B
Balance Sheet

C
Cash Flow Statement

D
Trial balance

Solution

Trial balance is normally prepared at the end of the financial year to check whether all entries are posted in the ledger. It is prepared by taking the balances of both debit and credit extracted from various accounts in a list.

If trial balance agrees, it proves that books are arithmetically correct.
Question 2
1 / -0

At the end of the accounting period or at the end of each month, the balances of the ledger accounts are extracted and is prepared to test as to whether the total debits are equal to total credits.

A
Profit & Loss Account

B
Balance Sheet

C
Cash Flow Statement

D
Trial balance

Solution

A trial balance is prepared at the end of the accounting period or at the end of each month, the balances of the ledger accounts are extracted and is prepared to test as to whether the total debits are equal to total credits. Its prepared to check the arithmetical accuracy of the books of account.
Question 3
1 / -0

Which of the following is/are method for preparation of trial balance?

A
Balances Method

B
Totals Method

C
Both (A) & (B)

D
None of the above

Solution

Trial balance is normally prepared at the end of the financial year to check whether all entries are posted in the ledger. If trial balance agrees, it proves that books are arithmetically correct. Trial balance can be prepared by various methods:
1) Balance method in which only net balances of each account are carried to trial balance depend on the balance i.e. debit or credit.
2) Totals method in which the total of both the sides i.e. debit and credit are carried to the trial balance.
Question 4
1 / -0

If the trial balance do not agree after transferring the balance of all 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 knows as_____________.

A
Memorandum Account

B
Capital Account

C
Suspense Account

D
Drawing Account

Solution

If the trial balance do not agree after transferring the balance of all 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 knows as suspense account.
It is temporary account prepared when the destination of transaction cannot be determined.
Question 5
1 / -0

Which of the following statement is correct?

A
If there is gross loss in trading account then profit & loss account will also have net loss always.

B
Balance sheet gets tallied even if there is a two sided error.

C
Cash book is similar to balance sheet.

D
All of the above.

Solution

Only statement B is correct.
A - False. If there is gross loss it's not necessary to always have a net loss. There may be a possibility that the company may have more indirect income than indirect expenses.
B - True. The balance sheet gets tallied even if there are 2 sided errors or commonly known as compensating errors. These errors do not affect the agreement of the trial balance.
C - False. Cashbook is not similar to a balance sheet, but a cash book is similar to a receipts and payments account, and a post-closing trial balance is like a balance sheet as it contains only balance sheet figures.
Question 6
1 / -0

Difference of totals of both debit and credit side of the trial balance is transferred to _________.

A
Miscellaneous Account

B
Difference Account

C
Trading Account

D
Suspense Account

Solution

Accounting is based on the dual aspect concept. Whereas every business transaction affects two account. For every debit there will be a credit and vice-versa. In such situation trial balance must be tallied.

But due to some clerical error done while doing the accounting, there are chances that trial balance will not agree. In such case, the difference in trial balance is transferred to a temporary account named as "suspense a/c".
Question 7
1 / -0

Which of the following statement contains all the types of account i.e., personal, real & nominal account?

A
Balance sheet

B
Trial balance

C
Income statement

D
None of the above

Solution

Trial balance is a list of all the balances of each of the account. It includes all accounts of expenses, incomes, assets, liabilities, personal account.
Preparation of trial balance includes all types of account i.e. personal, real ad nominal account.
Question 8
1 / -0

___________ is a statement of debit & credit balances, while __________ is a statement of assets and liabilities.

A
Profit & loss, Balance sheet

B
Trial balance, Balance sheet

C
Balance sheet, Trading account

D
Trial balance, Profit & loss

Solution

Trial balance is a list of all the balances of each of the account. It includes all accounts of expenses, incomes, assets, liabilities, personal account.
Balance Sheet is a statement of assets and liabilities. It shows the financial position of the organization on a particular date.
Question 9
1 / -0

If the rate of gross profit increases in the current financial year, the same may happen due to which of the following reason?

A
There is omission of purchases which was not accounted for.

B
Closing stock was valued at higher price.

C
Selling price has been increased without corresponding increase in cost.

D
All of the above.

Solution

If the gross profit has shown an increase as compared to the previous year, and in-depth analysis has to be carried out to find out the reasons for such higher profits. Below are the probable reasons of showing the higher gross profit:
1) Purchases are omitted while recording the transactions.
2) Closing stock is valued at higher prices.
3) Selling prices are increased in the current year without a corresponding increase in cost.
Question 10
1 / -0

Bank overdraft is shown on the _______ side of trial balance.

A
credit

B
debit

C
front

D
none of these

Solution

Bank overdraft is a liability and liabilities are always having a credit balance.
Therefore, bank overdraft is to be shown on the credit side of the trial balance.

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Trial Balance and Rectification of Errors Test 19

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Trial Balance and Rectification of Errors Test 19

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Rank

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SHARING IS CARING

Question 1

Profits & Loss Account

Balance Sheet

Cash Flow Statement

Trial balance

Solution

Question 2

Profit & Loss Account

Balance Sheet

Cash Flow Statement

Trial balance

Solution

Question 3

Balances Method

Totals Method

Both (A) & (B)

None of the above

Solution

Question 4

Memorandum Account

Capital Account

Suspense Account

Drawing Account

Solution

Question 5

If there is gross loss in trading account then profit & loss account will also have net loss always.

Balance sheet gets tallied even if there is a two sided error.

Cash book is similar to balance sheet.

All of the above.

Solution

Question 6

Miscellaneous Account

Difference Account

Trading Account

Suspense Account

Solution

Question 7

Balance sheet

Trial balance

Income statement

None of the above

Solution

Question 8

Profit & loss, Balance sheet

Trial balance, Balance sheet

Balance sheet, Trading account

Trial balance, Profit & loss

Solution

Question 9

There is omission of purchases which was not accounted for.

Closing stock was valued at higher price.

Selling price has been increased without corresponding increase in cost.

All of the above.

Solution

Question 10

credit

debit

front

none of these

Solution

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