IGCSE Accounting Paper-1: Specimen Questions with Answers 317 - 318 of 338
Question 317
Question
MCQ▾ABC Company has shareholder՚s equity of $ 20000 & total assets of $ 50000. 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.