Short Questions and Answers-Trial Balance
The 5th step of the accounting cycle is the preparation of the trial balance. The trial balance is prepared to verify the arithmetic accuracy of the accounts. Trial balance helps to find the errors and correct the errors.
So, today we’re going to learn about the “25 Short Questions and Answers – Trial Balance” If you read it from top to bottom, I’m sure you’re going to get a basic idea of the trial balance. It will also increase your accounting knowledge, which will help to perform any tests well.
For theory you may read these articles:
- Trial Balance- Definition, Features, Importance, Method
- Factors to be considered in Preparing of the Trial Balance
- Procedure for Preparing a Trial Balance
So, let’s get started.
Question-01: What is a Trial Balance?
Answer: A trial balance is a list of debit and credit balances extracted from the ledger, including the balance of cash and bank columns of the cash book on a given date.
Question-02: What is the objective of the trial balance?
Answer: The objectives of preparing the trial balance are as follows:
- Verification of accurate posting of journal and ledger entries.
- Facilitate the preparation of a statement of comprehensive income and a statement of financial position.
- Find out the mistakes and correct the mistakes.
Question- 03: What is the main objective of trial balance?
Answer: The main objective of the trial balance is to test the arithmetical accuracy of the accounts.
Question-04: Which ledger balances are written on the debit side of the trial balance?
Answer: The ledger balances are written on the debit side of the trial balance are as follows
- Expenses paid in advance,
- Accrued incomes, and etc.
Question-05: Which ledger balances are written on the credit side of the trial balance?
Answer: The ledger balances are written on the credit side of the trial balance are as follows:
- Outstanding Expenses,
- Unearned Incomes,
- Reserves, etc.
Question-06: What kinds of errors are not detected by the trial balance?
Answer: The types of errors that are not detected by trial balance are as follows:
- Errors of omission
- Errors of writing
- Compensating Errors
- Errors of miss-posting
- Errors of Principle.
Questions-07: What kinds of errors are detected by the trial balance?
Answer: The types of errors detected by the trial balance are as follows:
- Posting Errors
- Listing Errors
- Costing and balancing errors
Question-08: Is it mandatory to prepare trial balance?
Answer: It is not mandatory to prepare a trial balance.
Question-09: Suspense Account is basically what kind of account?
Answer: Suspense Account is a temporary account.
Question-10: When is the trial balance prepared?
Answer: The trial balance is prepared at the end of the specified accounting period.
Question-11: What is an error of omission?
Answer: If a transaction is not recorded in the journal or is not transferred from the journal to the ledger, it is called an error of omission.
Question-12: What is an error of commission?
Answer: If you debit and credit more or less than the amount of money that has been transacted, or if you have recorded more or less amount of money as both sides in the ledger, it is called an error of commission.
Question-13: What is a compensating Error?
Answer: If an error is unknowingly corrected by another error, it is called a compensating error.
Question-14: What is an error of principle?
Answer: Mistake made in the absence of accounting ethics is called the error of principle.
Question-15: What is an error of miss-posting?
Answer: If the sum of money is written on the same side of another account instead of one account, the mistake that is made is called an error of miss-posting.
Question-16: What does the suspense account express in the trial balance?
Answer: suspense account expresses the difference between the debit column and the credit column.
Question-17: What kind of error would it be to write the revenue expenditure as the capital expenditure and the capital account as the revenue account?
Answer: Error of principle
Question-18: What do you have to do before preparing the financial statement correctly?
Answer: You have to prepare trial balance before preparing the financial statement correctly.
Question-19: What are used to prepare the trial balance?
Answer: Ledger balances are used to prepare the trial balance.
Question-20: Which accounts do not include in the trial balance?
Answer: Closing stock, Opening cash in hand, and opening bank deposits.
Question-21: What is the main limitation of the trial balance ?
Answer: The main limitation of the trial balance is it sometimes can not identify the errors, even if both sides of the trial balance match.
Question-22: When is the closing stock included in the trial balance?
Answer: When the trial balance includes adjusted purchases and gross profits.
Question-23: What is the formula for the calculation of the adjusted purchase?
Answer: Adjusted Purchase = Opening stock + Purchase + Purchase related all expenses – Closing stock
Question-24: What is the sales ledger balance?
Answer: Sales ledger balances are considered as sundry debtors and put on the debit side of the trial balance.
Question-25: What is the purchase ledger balance?
Answer: Purchase ledger balances are considered as sundry creditors and put on the credit side of the trial balance.
I hope you’ve learned about the “25 Short Questions and Answers-Trial Balance” at the end of the article.
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