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1. Trial Balance is
a. A statement
b. A Ledger
c. An account
d. A note.
Trial balance is a statement, not any ledger account. In Trial Balance, debit and credit balances of all ledgers are shown to test arithmetical accuracy. So, option (a) is correct
2. Trial Balance is prepared
a. On a particular date
b. For a particular month
c. For a particular year
d. None of these.
A Trial Balance is prepared as on or particular date (not for a period). So, option (a) is correct.
3. Trial Balance is prepared to
a. Determine the arithmetical accuracy of the books of accounts
b. Help in preparation of final accounts.
c. Determine the balances of various accounts of persons, assets, income, and expenses at a glance.
d. All of them
Trial Balance is prepared for Determination of arithmetical accuracy. So, statement (a) is correct. To prepare P & L & Balance Sheet. So, statement (b) is correct. For getting the ledger balances of ledger accounts. So, statement (c) is correct.. So, option (d) is correct.
4. Trial Balance is the link between the
a. Journal and ledger
b. Journal and Final Accounts
c. Ledger and Final account
d. P & L A/c and Balance sheet
Trial Balance is prepared after balancing of ledger. The next stage is preparation of final accounts. Trial Balance is the link between Ledger and Final accounts. So, option (d) is correct.
5. Which type of Errors are not disclosed by Trial Balance
Error of principle
Compensating error
Error of omission
All of these.
a. Error of principle occur due to application of the principles of accounting e.g., wages paid for the erection of machinery debited to wages account instead of debiting to machinery A/c. So, this type of errors cannot be identified by the Trial Balance. So, Statement (a) is true.
b. Compensating errors mean – one error is compensated by another error of opposite nature, So, they are not identified by trial balance. So, Statement (b) is true.
c. Error of omission occurs when a transaction is totally omitted to record in the books of original entry trial balance still tallies. So, Statement (c) is true.
d. So, trial balance cannot disclose Error of principle, Compensating Error & Error of omission. So, option (d) is correct.
6. A Trial Balance should be prepared
a. After Journal entries
b. After posting into Ledger Book
c. After Balancing Ledger Books
d. None of the above.
A Trial Balance should be prepared after balancing of all ledger accounts. So, option (c) is correct.
7. If the difference in Trial Balance could not be resolved and preparation of Final Accounts can not be delayed then the difference would be
a. Posted to Suspense A/c
b. Posted to Drawing A/c
c. Posted to Miscellaneous Income or Miscellaneous Expense A/c
d. Final Accounts may be prepared with difference.
If the Trial balance do not agree and finalization of final accounts cannot be further delayed, the difference would be put to an account called ‘Suspense account’. So, option (a) is correct.
8. Trial balance is a proof that
a. Entry, posting and ledger balancing are arithmetically correct
b. No error occurred in the books of accounts
c. The company or the organization abides by rules and regulations.
d. None of the above
In the double entry system, every transaction with equal amounts of debits and credits are recorded in trial balance. So, tallied Trial balance only ensures arithmetic accuracy of posting and casting, though all sorts of mistakes cannot be detected through Trial Balance. So, option (a) is correct.
9. Trial Balance is prepared
a. Annually
b. Yearly
c. Quarterly
d. At certain interval of period as decided by the organization.
Trial Balance is prepared on a particular date (such as monthly, half-yearly or yearly) as decided by the management. So, option (d) is correct.
10. Which of the following statement will be regarded as a cause of mismatch in the trial balance?
a. Omission to record a transaction in the books of original entry.
b. Compensation of errors by another error of opposite nature.
c. Posting of an amount in wrong side of Ledger Book
d. None of the above
Posting in wrong side of Ledger Book will cause mistake in Ledger Balance and hence in Trial Balance. So, option (c) is correct.
11. Which of the following statements is correct?
a. The trial balance is a profit statement of a concern during a period.
b. The trial balance is a sub-part of the Profit and Loss A/c.
c. The trial balance is a summary of only assets and liabilities.
d. The Trial Balance is not part of statutory published accounts.
Trial Balance is not part of published Accounts. So, option (d) is correct.
12.The difference in the Trial Balance is transferred to Suspense Account, which appears in:
a. Balance Sheet
b. Capital Account in Balance Sheet
c. Profit & Loss Accounts
d. in Misc Expenses Accounts in Balance Sheet
The difference in Trial Balance is transferred to Suspense Account, which appears in Balance Sheet. So, option (a) is correct.
13. The opening inventory of the current year is overstated by Rs.5,000 and closing inventory is overstated by Rs.12,000. These errors will cause the net income for the current year by
a. Rs.17,000 (understated)
b. Rs.17,000 (overstated)
c. Rs.7,000 (overstated)
d. No effect in net income.
Overstatement of closing stock results in overstatement of profit and overstatement of opening stock results in understatement of profit. So, the net effect of the mistakes will be overstatement of profit by Rs.12,000 – Rs.5,000. = Rs.7, 000. So, option (c) is correct.
14. Bad Debt Recovery is
a. Added to debtors
b. Debited to P & L A/c
c. Reduced from debtors
d. Credited to P & L A/c.
When a bad debt is recovered later on, it is treated as income and so credited to Profit & Loss A/c. So, option (d) is correct.
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