IGCSE Accounting Paper-1: Specimen Questions with Answers 309 - 309 of 338
Question 309
Question
True-False▾Statements
Preparation of trial balance is the first step of recording in accounting process (Marks 3)
In a double entry system the total amount debited should always equal the total amount credited.
The normal balance of drawings A/c is credit.
Choices
| Choice (4) | |
|---|---|
a. | Both statement Ⅰ & statement Ⅲ are true. |
b. | Only statement Ⅱ is true. |
c. | All the statements are correct. |
d. | None of the statements is correct. |
Answer
b.Explanation
| True/False | |
| (I) Preparation of trial balance is the first step of recording in accounting process | False |
| (II) In a double entry system the total amount debited should always equal the total amount credited. | True |
| (III) The normal balance of drawings A/c is credit. | False |
Explanation:
- The first step of recording in accounting process is journalizing. Journalizing means recording business transactions in journal for the first time using source documents. Preparation of trial balance is the first step of summarizing.
- Double entry system is based on DUALITY concept which says that every transaction has two aspects: debits & credits and the total debits and total credits are equal.
- Drawing is a contra Capital A/c because it reduces the balance of capital. Since, Capital A/c has a normal credit balance, the normal balance of drawings A/c has to be debit.