CIE Accounting Paper-1: Specimen Questions with Answers 93 - 95 of 214

Question number: 93

MCQ▾

Question

Trial balance is prepared for finding out of ________

Choices

Choice (4) Response

a.

Arithmetical accuracy

b.

Balance the transaction

c.

Financial position

d.

Profit or Loss

Answer

a.

Explanation

Trial balance is a statement which shows the debit balances and credit balances of all transaction in the ledger. The main objective of preparing a trial balance is to check the arithmetical accuracy and to locate the errors.

Question number: 94

MCQ▾

Question

How is carriage outwards recorded in final accounts?

Choices

Choice (4) Response

a.

Debit Trading Account

b.

Debit Profit and Loss Account

c.

Credit Profit and Loss Account

d.

Credit Trading Account

Answer

b.

Explanation

Trading accounts deals with the result of buying and selling of goods whereas Profit and loss account shows the business activity. Carriage outwards are indirect expenses which are chargeable during the activities of the business.

Question number: 95

Short Answer Question▾

Write in Short

Identify the error involved in the following transaction:

Goods of $5000 purchased on credit from Siju, is recorded in the book for $5500.

Explanation

Error of recording

This error arises when the transaction is wrongly recorded in the books of original entry. The error of recording comes under the Errors of commission. This error arise due to wrong recording, wrong posting, wrong balancing and wrong carrying forward.