Trial Balance Quiz: Create Accounting Software with Ease

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Questions and Answers

What is the purpose of preparing a Trial Balance?

To prove the arithmetical accuracy of the Books of Accounts (correct)

To determine the net profit of the business

To record all ledger accounts at the end of the financial year

To calculate the total assets of the business

Which type of Trial Balance shows only the balances of each ledger account?

Credit Trial Balance

Net Trial Balance (correct)

Debit Trial Balance

Gross Trial Balance

Why is Gross Trial Balance not in common use?

Because it does not show the arithmetical accuracy of Books of Accounts

Because it does not disclose the balance of each account (correct)

Because it proves the net profit of the business

Because it includes all ledger accounts

What is recorded in the credit amount column in Net Trial Balance?

Credit balances of each ledger account Signup and view all the answers

In what book are all cash and bank transactions recorded?

Cash Book Signup and view all the answers

When is a Trial Balance usually prepared?

At the end of the financial year Signup and view all the answers

Which side of the Cash Book is also known as the Debit side?

Receipt Side Signup and view all the answers

What is the dual purpose of the Cash Book?

Journal and Ledger Signup and view all the answers

In a two column Cash Book with Cash and Bank columns, what does the Bank column represent?

Bank Account Signup and view all the answers

When are contra entries recorded in the Cash Book?

When both cash and bank accounts are simultaneously affected Signup and view all the answers

What does the letter 'C' in the Ledger Folio column denote in the Cash Book?

Contra Entries Signup and view all the answers

In large business organizations, what is the purpose of the Petty Cash Book?

Spending on stationary, postage, and tele Signup and view all the answers

What role does the Bank play in providing services to traders?

Accepting deposits and providing various services like payment by cheques, loan facility, etc. Signup and view all the answers

What happens when a trader opens a Current Account with the bank?

He can avail Overdraft facility Signup and view all the answers

Under what circumstances does a trader open a Current Account with the bank?

When engaging in a number of banking transactions Signup and view all the answers

What types of transactions affect both Cash Account and Bank Account simultaneously?

Transactions that decrease cash balance and increase bank balance or vice versa Signup and view all the answers

What is the primary purpose of a cashbook?

To ensure that all transactions have been recorded and to balance with the bank statement Signup and view all the answers

How are cash sales recorded in the cashbook?

As a cash inflow Signup and view all the answers

What does cashbook management involve?

Reconciling the cashbook with the bank statement and ensuring all transactions are accounted for Signup and view all the answers

What is the purpose of reconciling the cashbook with the bank statement?

To ensure that all transactions have been recorded accurately Signup and view all the answers

How are bank withdrawals recorded in the cashbook?

As a cash inflow Signup and view all the answers

What does the term 'cash inflow' generally refer to in the context of the cashbook?

Cash sales Signup and view all the answers

What is the primary purpose of a petty cashbook?

To record small cash expenses for a business Signup and view all the answers

In petty cash management, what is the purpose of reconciling the petty cashbook with the actual petty cash at regular intervals?

To ensure all transactions have been recorded and the petty cash float is sufficient Signup and view all the answers

What is the purpose of preparing a trial balance?

To verify that the debit and credit totals of the accounts are equal Signup and view all the answers

What does trial balance preparation involve?

All of the above Signup and view all the answers

What is the main purpose of a cashbook?

To record cash inflows and outflows Signup and view all the answers

What distinguishes a petty cashbook from a regular cashbook?

Petty cashbook records small cash expenses for a business Signup and view all the answers

What is the purpose of reconciling the petty cashbook with actual petty cash?

To ensure all transactions have been recorded and the petty cash float is sufficient Signup and view all the answers

What distinguishes trial balance preparation from petty cash management?

Trial balance preparation involves reconciling account balances, while petty cash management does not Signup and view all the answers

What is the primary focus of trial balance preparation?

To list and verify account balances in the general ledger Signup and view all the answers

Study Notes

Trial Balance Preparation

The purpose of preparing a Trial Balance is to ensure the accuracy of ledger accounts and detect any errors.
A Balance Trial Balance shows only the balances of each ledger account.

Cash Book and Bank Transactions

All cash and bank transactions are recorded in the Cash Book.
The left side of the Cash Book is also known as the Debit side.
The dual purpose of the Cash Book is to record both cash and bank transactions.
In a two-column Cash Book, the Bank column represents bank transactions.
Contra entries are recorded in the Cash Book when there is a transfer between cash and bank accounts.

Petty Cash Book

In large business organizations, the Petty Cash Book is used to record small expenses.
The primary purpose of a petty cashbook is to manage and record small expenses.

Cashbook Management

Cash sales are recorded on the debit side of the Cash Book.
Cashbook management involves recording, classifying, and reporting cash transactions.
The primary purpose of a cashbook is to record, classify, and report cash transactions.
Bank withdrawals are recorded on the credit side of the Cash Book.
Cash inflow refers to the receipt of cash or cheques from customers.

Reconciliations

Reconciling the cashbook with the bank statement ensures accuracy and detects any discrepancies.
Reconciling the petty cashbook with actual petty cash ensures accuracy and detects any discrepancies.

Petty Cash Management

Petty cash management involves recording, classifying, and reporting small expenses.
The purpose of reconciling the petty cashbook with actual petty cash is to ensure accuracy and detect any discrepancies.

Trial Balance vs Petty Cash Management

Trial balance preparation involves checking the accuracy of ledger accounts, whereas petty cash management involves managing and recording small expenses.
The primary focus of trial balance preparation is to ensure the accuracy of ledger accounts.

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Description

Learn about the trial balance in accounting, which is an abstract or list of all ledger accounts showing debit and credit balances as of a specific date. Understand its importance in ascertaining the arithmetical accuracy of books of accounts and its types, such as gross trial balance and net trial balance.

Trial Balance in Accounting