CPT Chapter2, Unit-3 Fundamentals of Accountancy CA.S.K.Chhabra

CPT Chapter2, Unit-3 Fundamentals of Accountancy CA.S.K.Chhabra

What is a Trial balance? It is a Statement prepared to ensure the arithmetical accuracy of all the accounts before the preparation of the financial statements

Total method Total and balance method Balance method

Under this method, every ledger account is totaled and the total amount of both debit side and credit side is transferred to Trial balance

Under this method Every ledger account is balanced and these balances only are carried forward to the trial balance

Under this method above two methods are combined

If the trial balance does not agree after transferring the balance of all ledger accounts then the trial balance is tallied by transferring the difference of debit and credit side to account known as suspense account Suspense Account is a temporary account opened to proceed further and to prepare the financial statement timely

Multiple choice Questions

A trial balance will not balance if (a) Correct journal entry is posted twice. (b) The purchase on credit basis is debited to purchases and credited to cash. (c) 500 cash payment to creditors is debited to creditors for ` 50 and credited to cash as ` 500. (d) None of the above Answer: (c)

` 1, 500 received from sub-tenant for rent and entered correctly in the cash book is posted to the debit of the rent account. In the trial balance (a) The debit total will be greater by ` 3,000 that credit total (b) The debit total will be greater by ` 1,500 than credit total (c) Subject to other entries being correct the total will agree (d) None of the above Answer: (a)

After the preparation of ledgers, the next step is the preparation of (a) Trading accounts (b) Trial balance (c) Profit and loss account (d) None of the above Answer: (b)

After preparing the trial balance the accountant finds that the total of debit side is short by ` 1,500. This difference will be (a) Credited to suspense account (b) Debited to suspense account (c) Adjusted to any of the debit balance account (d) Adjusted to any of the credit balance account Answer: (b)

Account heads Debit ` Credit ` Sales 15,000 Purchases 10,000 Miscellaneous expenses 2,500 Salaries 2,500 Total 12,500 17,500 The difference in trial balance is due to? (a) Wrong placing of sales account (b) Wrong placing of salaries account (c) Wrong placing of miscellaneous expenses account (d) Wrong placing of all accounts Answer: (b)

Methods of preparing trial balance are (a) Balance Method (b) Total Method (c) Total and Balance Method (d) All of these Answer: (d)

Trial Balance is a:- (a) Statement (b) Account (c) Summary (d) Ledger Answer: (a)

The Trial Balance of M/s RAM & Co. show closing stock of Rs. 30,000. It will be recorded in:- (a) Trading account (b) Profit and Loss Account (c) Balance Sheet (d) Both (a) and (c) Answer: (c)

Difference of totals of both debit and credit side of trial balance is transferred to:- (a) Trading account (b) Suspense account (c) Difference account (d) Miscellaneous account Answer: (b)

A Trial Balance contains the balance of:- (a) Only Personal and Real accounts (b) Only Real and Nominal accounts (c) Only Nominal and Personal accounts (d) All accounts Answer: (d)

You are required to find out the reasons for the difference in the following trial balance of your client and draw the corrected trial balance Particulars Dr (`) Cr (`) Sales Due from customers 5,000 5,000 Total 0 10,000

Due from customers is an asset so it will have a debit balance

Corrected trial balance of client As on 31 March Particulars Dr (`) Cr (`) Sales Due from customers 5,000 5,000 Total 5,000 5,000

You are required to find out the reasons for the difference in the following trial balance of Mr X and draw the corrected trial balance Particulars Dr (`) Cr (`) Sales Sales Return Due from customers 4,750 5,000 250 Total 4,750 5,250

Sales return should have a debit balance

Corrected trial balance of Mr X As on 31 March Particulars Dr (`) Cr (`) Sales Due from customers Sales return 4,750 250 5,000 Total 5,000 5,000

You are required to draw the correct trial balance of ABC for the year ended 31 March 2013 and spot the reasons for the differences Particulars Dr (`) Cr (`) Provision for doubtful debts Furniture Debtors Expenses Sales Bank overdraft 200 1,000 18,000 200 18,000 1,000 Total 1,200 37,200

Provision for doubtful debts has a credit balance Expenses have a debit balance Debtors should have a debit balance

Corrected trial balance of ABC As on 31 March 2013 Particulars Dr (`) Cr (`) Provision for doubtful debts Furniture Debtors Expenses Sales Bank overdraft 1,000 18,000 200 200 18,000 1,000 Total 19,200 19,200