Tag: elements of book keeping and accountancy

Questions Related to elements of book keeping and accountancy

Which of the following is the objective of trial balance?

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

  1. To ascertain the geometrical accuracy of the ledger accounts.

  2. To help in locating errors.

  3. To help in the preparation of the accounting report.

  4. None of the above

Show answer
Correct Option: B
Explanation:

The trial balance is prepared to fulfill the following objectives:
1. To ascertained the arithmetical accuracy of the ledger accounts.
2. To help in locating errors.
3. To help in the preparation of the financial statements.

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

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

  1. credit

  2. debit

  3. front

  4. none of these

Show answer
Correct Option: A
Explanation:

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. 

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

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

  1. Balances Method

  2. Totals Method

  3. Both (A) & (B)

  4. None of the above

Show answer
Correct Option: C
Explanation:

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.  

Which of this A/c appearing in trial balance is NOT transferred to income statement?

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

  1. Salary A/c

  2. Purchase A/c

  3. Accumulated Depreciation A/c

  4. Bad Debts A/c

Show answer
Correct Option: C
Explanation:

There are two ways to record the depreciation in the books of account. 

1) Depreciation a/c is debited and the respective asset a/c will be credited. In such case, depreciation is recorded in the profit & loss a/c and assets are shown in the balance sheet on the net value i.e. gross value- depreciation. 

2) In the second method, assets are always kept in the books on their original value. Depreciation is routed through accumulated depreciation a/c. In such case, assets are shown in the balance sheet as Gross assets minus accumulated depreciation. 

Accumulated depreciation a/c is not to be transferred to income statement and to be shown in the balance sheet. 

In the trial balance the balance of the Provision for Depreciation Account is _______.

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

  1. Shown as a credit item

  2. Shown as a debit item

  3. Sometimes shown as a credit, sometimes as a debit

  4. Not shown, as it is part of depreciation

Show answer
Correct Option: A
Explanation:

All the liabilities and provisions account are always having a credit balance. When the depreciation is provided in the books by creating a depreciation provision account, following entry will be passed:


Depreciation A/c                 Dr.
  To Provision for Depreciation A/c 

Provision for depreciation will be shown as credit item in the trial balance. 

What is UNCOMMON in trial balance?

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

  1. Balances of personal, real and nominal account are shown

  2. Closing stock appears in trial balance

  3. Statement of assets and liabilities

  4. Both b & c

Show answer
Correct Option: D
Explanation:

What is uncommon in the trial balance is closing stock appears in the trial balance and statement of assets and liabilities. The trial balance has balances of personal, nominal and real accounts. 

The closing entry for transfer of Salaries Paid A/c appearing in the Trial Balance will be _________________.

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

  1. debit Salaries A/c, Credit P&L A/c

  2. debit Salaries A/c, Credit Trading A/c

  3. debit Trading A/c, Credit Salaries A/c

  4. debit P&L A/c, Credit Salaries A/c

Show answer
Correct Option: D
Explanation:

Before finalization of account, closing entries are required to be passed in the books of account by transferring all the nominal accounts i.e. account of expenses and incomes to the respective a/c.  At the end of the financial year, all nominal accounts will not be carried over to the next financial year. 


Following closing entry will be passed for transfer of salaries:
Profit & Loss A/c                           Dr.
       To Salaries A/c 

Which of the following errors are revealed are by the trial balance?

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

  1. Errors in balancing account

  2. Errors of principle

  3. Errors of complete omission

  4. Compensatory Errors.

Show answer
Correct Option: A
Explanation:

Error in balancing an account is an error of commission. In such situation, trial balance will not be tallied. Hence these kind of errors can be revealed by the trial balance. 

If there is any error in trial balance which is not effecting its total, will it affect any accounting procedure?

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

  1. Yes

  2. No

  3. Don't know

  4. Partly Yes

Show answer
Correct Option: B
Explanation:

If trial balance agrees, it is assumes that the books are arithmetically correct. But it does proves that the books are error free. There are errors which does not give any effect in the total of trial balance but errors are prevailing in the books. But such errors will not affect any accounting procedure. 

Which of the following errors will result into non-agreement of the trial balance?

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

  1. Totaling the returns inwards journal as $Rs. 11,400$ instead of $Rs. 12,600$.

  2. Recording a sales invoice for $Rs. 5,600$ as $Rs. 6.500$ in the Sales Journal.

  3. Failing to record a purchase invoice for $Rs. 54,000$ in the Purchases Journal.

  4. Recording in the Purchases Journal, an invoice, for acquiring a noncurrent asset for $Rs. 60,000$.

Show answer
Correct Option: A