Advertisements
Advertisements
Question
Which of the following is/are the objective(s) of preparing trial balance?
Options
Serving as the summary of all the ledger accounts
Helping in the preparation of final accounts
Examining arithmetical accuracy of accounts
Serving as the summary of all the ledger accounts, Helping in the preparation of final accounts and Examining arithmetical accuracy of accounts
Solution
Serving as the summary of all the ledger accounts, Helping in the preparation of final accounts and Examining arithmetical accuracy of accounts
APPEARS IN
RELATED QUESTIONS
State whether the balance of the following accounts should be placed in the debit or the credit column of the trial balance:
- Carriage outwards
- Carriage inwards
- Sales
- Purchases
- Bad debts
- Interest paid
- Interest received
- Discount received
- Capital
- Drawings
- Sales returns
- Purchase returns
What are the objectives of preparing trial balance?
‘A trial balance is only a prima facie evidence of the arithmetical accuracy of records’. Do you agree with this statement? Give reasons.
Describe the purpose for the preparation of trial balance
As an accountant of a company, you are disappointed to learn that the totals in your new trial balance are not equal. After going through a careful analysis, you have discovered only one error. Specifically, the balance of the Office Equipment account has a debit balance of ₹ 15,600 on the trial balance. However, you have figured out that a correctly recorded credit purchase of pen-drive for ₹ 3,500 was posted from the journal to the ledger with a ₹ 3,500 debit to Office Equipment and another ₹ 3,500 debit to creditors accounts.
Answer each of the following questions and present the amount of any misstatement:
(a) Is the balance of the office equipment account overstated, understated, or correctly stated in the trial balance?
(b) Is the balance of the creditors account overstated, understated, or correctly stated in the trial balance?
(c) Is the debit column total of the trial balance overstated, understated, or correctly stated?
(d) Is the credit column total of the trial balance overstated, understated, or correctly stated?
(e) If the debit column total of the trial balance is ₹ 2,40,000 before correcting the error, what is the total of credit column.
