IGCSE Accounting Paper-1: Specimen Questions with Answers 317 - 318 of 338

Question 317

Question

MCQ▾

ABC Company has shareholder’s equity of $ 20,000 & total assets of $ 50,000. There is no goodwill on its balance sheet nor any intangible assets. Its proprietary ratio is: (Marks 1)

Choices

Choice (4)

a.

50%

b.

40%

c.

60%

d.

Question does not provide sufficient data or is vague

Answer

b.

Explanation

Question 318

Question

MCQ▾

Which of the following is not correct regarding the Trial Balance?

Choices

Choice (4)

a.

It is a list of all personal and all real accounts in the books of a business

b.

It is used to check the accuracy of ledger accounts balances

c.

If a transaction is omitted in the books of accounts, it will not affect the trial balance

d.

Trial balance is prepared at the end of an accounting period

Answer

a.

Explanation

  • Trial Balance is a statement which is prepared at the end of an accounting period to check the arithmetical accuracy of accounts. It is a list of the balances b/d of all the accounts: Real, Personal and Nominal account.
  • It comprises of debit and credit columns under which are posted the balances of accounts. After posting, the sum total of the debit column equals the sum total of the credit column. But if they do not match, it would imply some error in the recording or posting of transactions.

  • Since every transaction is recorded as per the double entry system, every transaction results into equal debits and credits. So, when a transaction is omitted or completely left unrecorded, the trial balance still tallies.

🎯 Choose Paper