When all ledger balances are combined into equal debit and credit account column totals, a trial balance is a form of accounting worksheet. A trial balance is prepared by a company on a regular basis, generally at the conclusion of each reporting period. The primary goal of a trial balance is to ensure that the entries in a company's bookkeeping system are mathematically correct.
The mechanism of a Trial Balance
The purpose of preparing a trial balance for a company is to discover any mathematical errors in the double-entry accounting system. The trial balance is deemed balanced if the total debits match the total credits, and the ledgers should be error-free. However, this does not rule out the possibility of accounting system errors. For example, poorly categorized transactions or those that are simply absent from the system might nevertheless represent major accounting errors that the trial balance technique would overlook.
Salient features of a Trial Balance
- A trial balance is a worksheet with two columns, one for debits and the other for credits, that confirms that a business's bookkeeping is mathematically proper.
- The debits and credits account for all of a company's business transactions during a certain time period, including the sum of accounts such as assets, costs, liabilities, and revenues.
- Although the debits and credits of a trial balance must be equal to guarantee that there are no mathematical errors, accounting systems may nevertheless have faults or errors.
Pre-requisites of preparing a Trial Balance
Ledger accounts are used by businesses to keep track of transactions. Before being included in a trial balance, ledger accounts may be debited or credited based on company activities. It's possible that many accounts have recorded multiple transactions. As a result, the final balance for each ledger account on the trial balance worksheet is the sum of all debits and credits recorded to that account as a result of all related business activity.
Following are some of the multiple choice questions on the Trial Balance with answers that will help the students in developing their knowledge.
Trial Balance MCQ
1. A suspense account facilitates the preparation of_____ even if the ____ has not been tallied.
2. Which account will have a zero balance after a company has journalized and posted closing entries?
3. Balances of the Accounts are transferred to:
4. Which of the following entries records the utility bill incurred but not paid from the water company?
5. Which of the following is a temporary account?
6. The last step in the accounting cycle is to
7. Bhandari’s trial balance was showing difference of ₹ 5,000 (debit side exceeds). While checking of total sales register, he found that the total is over – cast by ₹ 2,000. After correction in sales register what would be the difference in his trial balance.
8. Salaries paid ₹ 4,500 is shown in credit side of trial balance. In the total of trial balance the debit side will be short by -----------
9. Which of the following in Trial Balance is contradictory to each other?___________.
10. Trial Balance creates __________ accuracy.
11. In 2013, Abbott Company performs work for a customer and bills the customer $10,000; it also pays expenses of $3,000. The customer pays Abbott in 2014. If Abbott uses the cash basis of accounting, then Abbott will report:
12. Which types of accounts will appear in the post-closing trial balance and have a balance?
13. Little Corporation received $5,000 from a customer for whom it is to perform work in the future, debiting Cash and crediting Unearned Revenue. At the end of the accounting period, Little has earned $2,000 of the revenue. The adjusting entry will require a:
14. To record revenue that has been received but not yet earned, an entry is made that increases a liability account.
15. Accounts used to accumulate information from one fiscal period to the next are
16. After the closing entries are posted, the owner’s capital account balance should be the same as shown
17. The accounts that appear on the post-closing trial balance are
18. After closing entries are posted, the balance in the owner’s drawing account should be
19. Classify the item : Trade Receivables
20. State whether trade receivable is found on the debit or credit side of the trial balance.
21. Nature of Income receivable: ____. (is a form of current asset)
22. A post-closing trial balance verifies the equality of debits and credits in a general ledger after the closing entries are posted.
23. Trial Balance is a statement which shows the ------- or the -------- of all the accounts.
24. When the amounts of a transaction must be recorded in a minimum of two accounts-
25. A transaction is omitted completely from the books so that there is no debit and credit entry of the transaction. This is an example of what errors?
26. The balances of the liability accounts must be reduced to zero to prepare the accounts for he next period.
27. Permanent accounts are used to accumulate information until it is transferred to the owner’s capital account.
28. Adjustments for unearned revenues:
29. Adjustments for prepaid expenses:
30. Expenses incurred in one fiscal period but not paid until a later fiscal period.
31. Payments for goods or services which have not yet been received.
32. We purchased Indian Insurance (Prepaid Insurance) on June 1st, 2020 for $252. What is the Insurance Expense as of December 31, 2020?
33. Refers to the allocation of the cost of the asset over its estimated useful life.
34. Interest incurred but not yet paid.
35. What is the balancing useful for ?
36. Where do you use creative movement?
37. douse UAE award for Creative Sport?
38. How many types of balancing?
40. Individual balancing is an type of balance?
41. The drawing account is a permanent account.
42. The series of accounting activities included in recording financial information for a fiscal period is called an accounting cycle.
43. The journal entry to close Income Summary when there is a net income is
44. Temporary accounts begin each new fiscal period with a
45. When the total expenses are greater than the total revenues,
46. At the end of a fiscal period, the balances of permanent accounts are summarized and transferred to the owner's capital account.
47. To close a temporary account, an amount equal to its balance is recorded in the account on the side opposite to its balance.
48. Temporary accounts must start each fiscal period with a zero balance.
49. Income Summary is a(n)
50. Temporary Accounts are also called nominal accounts.
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