Ledger And Trial Balance
This quiz on 'Ledger and Trial Balance' assesses knowledge on trial balance, T accounts, and ledger adjustments. It evaluates understanding of financial statements preparation and ensures readiness for more advanced accounting tasks.
- 1.
Which of the following best describes trial balance?
- A.
Shows the financial position of a business
- B.
It is a special account
- C.
Shows all the entries in the books
- D.
None of the above
Correct Answer
C. Shows all the entries in the booksExplanation
The trial balance is a statement that shows all the entries in the books of accounts. It lists all the debit and credit balances of all the accounts in the ledger. It is used to ensure that the total debits equal the total credits, which helps in detecting any errors in the bookkeeping process. The trial balance is not a financial position statement or a special account, but rather a tool used in the accounting process.Rate this question:
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- 2.
Is it true that the trial balance totals should agree?
- A.
No, there are sometimes good reasons why they differ
- B.
Yes, except where the trial balance is extracted at the year end
- C.
Yes, always
- D.
No, because it is not a balance sheet
Correct Answer
C. Yes, alwaysExplanation
The trial balance is a statement that lists all the balances of the general ledger accounts. It is used to ensure that the total debits equal the total credits, which indicates that the accounting entries are in balance. This is important because any imbalance could indicate errors in the recording of transactions. Therefore, the trial balance totals should always agree to ensure the accuracy of the financial statements.Rate this question:
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- 3.
When capital increases, it is credited in the T account.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
When capital increases, it is credited in the T account because the T account is used to track the changes in a specific account. In accounting, a credit entry is used to record an increase in a liability, equity, or revenue account. Since capital is an equity account, an increase in capital would be recorded as a credit entry in the T account. This helps to accurately reflect the changes in the financial position of the business.Rate this question:
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- 4.
When capital increases, it is credited in the T account.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
When capital increases, it is credited in the T account because the T account is used to track the changes in accounts and their corresponding debits and credits. In this case, when capital increases, it is considered a credit because it represents an inflow of funds into the business. By crediting the capital account in the T account, it accurately reflects the increase in capital and helps maintain the balance of the accounting equation.Rate this question:
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- 5.
The T accounts must be balanced off before doing the trial balance.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Balancing off the T accounts before preparing the trial balance is necessary because it ensures that all the debits and credits in the accounts are properly recorded and equal. This step helps in identifying any errors or discrepancies in the accounting records before the trial balance is prepared, which is essential for accurate financial reporting. Therefore, it is true that the T accounts must be balanced off before doing the trial balance.Rate this question:
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Current Version
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Jun 10, 2024Quiz Edited by
ProProfs Editorial Team -
Nov 18, 2009Quiz Created by
Olilly
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