No verified paper has been uploaded for AJKPSC-PMS Paper Accountancy & Auditing 2015 MCQs yet.
The MCQs below are drawn from the Accountancy & Auditing subject category.
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831
When a new partner is admitted, how should the goodwill raised in the books be written off?
When goodwill is raised at the time of admission, it represents the value generated by the existing partners. Therefore, if it is to be written off, it must be distributed among the old partners in their old profit-sharing ratio, as it reflects the value created prior to the new partner's entry.
832
If the total of debit balances equals the total of credit balances, what does the trial balance verify?
A trial balance only confirms the arithmetic accuracy of the ledger postings, ensuring that for every debit entry, an equal credit entry was made. However, it does not guarantee that the entries are correct in principle, nor does it detect errors of omission or commission, as these errors might not affect the equality of the totals.
833
The structural format of a trial balance is most similar to which of the following accounting records?
A trial balance is a statement that lists the balances of all ledger accounts. Its format, consisting of columns for account names, debit amounts, and credit amounts, is structurally similar to a journal, which also records transactions in a tabular format before they are posted to the ledger.
834
What is the fundamental nature of a Trial Balance?
A Trial Balance is a statement prepared at the end of an accounting period that lists the debit and credit balances of all ledger accounts. Its primary purpose is to verify the arithmetical accuracy of the entries made in the books of account by ensuring that total debits equal total credits.
835
Which of the following statements regarding the limitations of a trial balance is incorrect?
A trial balance does not detect all errors. Specifically, it cannot identify errors of omission, errors of principle, or compensating errors, as these do not affect the equality of the debit and credit totals. Therefore, the statement that all errors are highlighted by the trial balance is factually incorrect, as it only verifies the mathematical accuracy of the ledger balances.
836
Which accounting record serves as the primary source for the preparation of a trial balance?
A trial balance is a statement prepared to verify the arithmetical accuracy of the ledger accounts. It lists the closing balances of all ledger accounts at the end of an accounting period. Since the trial balance is essentially a summary of these balances, the ledger accounts serve as the fundamental source document for its preparation.
837
From which accounting record are the figures for the trial balance column of a worksheet primarily derived?
The trial balance is prepared by listing the closing balances of all accounts found in the ledger. The worksheet uses these ledger balances to ensure that total debits equal total credits before preparing the final financial statements.
838
At what point in the accounting cycle is a Trial Balance typically prepared?
A Trial Balance is a statement prepared to verify the arithmetical accuracy of the ledger accounts. It is standard practice to prepare it at the end of an accounting period, after all transactions have been posted to the ledger and accounts have been balanced, to ensure that total debits equal total credits before finalizing the financial statements.
839
Which accounting record serves as the primary basis for the preparation of a trial balance?
The ledger accounts serve as the foundation for preparing a trial balance. Once all transactions are recorded in the journal and posted to the respective ledger accounts, the closing balances of these accounts are extracted. These balances are then listed in the trial balance to verify the mathematical accuracy of the double-entry bookkeeping system by ensuring total debits equal total credits.
840
Which of the following accounts typically maintains a normal debit balance in a trial balance?
The cash account is an asset account, and assets always have a normal debit balance. When cash is received, it is debited, increasing the balance. Conversely, income and liability accounts like rent income, creditors, and unearned income typically carry credit balances, as they represent obligations or earnings that increase with credits.
