Unit 3: Question & Answer - Trial Balance | Principles and Practice of Accounting - CA Foundation PDF Download

Summary
♦ Trial balance contains various ledger balances on a particular date.
♦ It forms the basis for preparing final statement i.e. profit and loss statement and balance sheet.
♦ If it tallies, it means that the accounts are arithmetically accurate but certain errors may still remain undetected.
♦ It is very important to carefully journalize and post the entries, following the rules of accounting.

Multiple Choice Questions
Ques 1: 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 creditor is debited to Trade payables for ₹ 50 and credited to cash as ₹ 500.
Ans: c
Ques 2: ₹ 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 than the credit total.
(b) The debit total will be greater by ₹ 1,500 than the credit total.
(c) Subject to other entries being correct the total will agree.
Ans: a
Ques 3: After the preparation of ledgers, the next step is the preparation of
(a) Trading accounts
(b) Trial balance
(c) Profit and loss account
Ans: b
Ques 4: 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
Ans: b
Ques 5: 
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
Ans: b

Theory Questions
Ques 1: What is the trial balance? And how it is prepared?
Ans: Preparation of trial balance is the third phase in the accounting process. After posting the accounts in the ledger, a statement is prepared to show separately the debit and credit balances. Such a statement is known as the trial balance.
Trial balance contains various ledger balances on a particular date. It forms the basis for preparing final statement i.e. profit and loss statement and balance sheet. It is tallies, it means that the accounts are arithmetically accurate but certain errors may still remain undetected. Therefore, it is very important to carefully journalise and post the entries, following are rules of accounting.

Ques 2: Explain objectives of preparation of trial balance.
Ans: The preparation of trial balance has the following objectives:
(i) Trial balance enables one to establish whether the posting and other accounting processes have been carried out without committing arithmetical errors. In other words, the trial balance helps to establish arithmetical accuracy of the books.
(ii) Financial statements are normally prepared on the basis of agreed trial balance; otherwise the work may be cumbersome. Preparation of financial statements, therefore, is the second objective.
(iii) The trial balance serves as a summary of what is contained in the ledger; the ledger may have to be seen only when details are required in respect of an account.

Ques 3: Even if the trial balance agrees, some errors may remain. Do you agree? Explain.
Ans: In spite of the agreement of the trial balance some errors may remain. These may be of the following types:
(i) Transaction has not been entered at all in the journal.
(ii) A wrong amount has been written in both columns of the journal.
(iii) A wrong account has been mentioned in the journal.
(iv) An entry has not at all been posted in the ledger.
(v) Entry is posted twice in the ledger.

Practical Question
Ques 1: An inexperienced bookkeeper has drawn up a Trial Balance for the year ended 30th June, 2017.
Ans: