IGCSE Accounting Paper-1: Specimen Questions with Answers 309 - 309 of 338

Question 309

Question

True-False▾

Statements

  1. Preparation of trial balance is the first step of recording in accounting process (Marks 3)

  2. In a double entry system the total amount debited should always equal the total amount credited.

  3. 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

Write True or False Against Each of the Following Statements
True/False
(I) Preparation of trial balance is the first step of recording in accounting processFalse
(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.

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