Trial Balance

A trial balance can be defined as a bookkeeping sheet which involves the compiling of the balance of the ledgers in two columns, debit and credit, and the total of both these columns should be equal. It is not to be confused with a balance sheet, in which a company’s entire valuation records are made like assets, liabilities, etc. It is the same reason why it is known as the trial balance- as the sum of both the credit and debit columns should be equal. 

Now, let us practice some MCQs based on the trial balance.

Multiple Choice Questions (MCQs)

Q1. Name the account type with a normal balance of credit.

1. 1. Revenue
   2. Asset
   3. Drawing
   4. Expense

The correct option is A) Revenue.

Q2. A trial balance shows up on both the equal sides of the credit and debit column:

1. 1. This means that though the arithmetic is correct, there are still chances of some errors in the sheet
   2. This means that there would be only a single error in the sheet
   3. This means that there would be more than one error in the sheet
   4. This means that there is no error in the sheet

The correct option is A) This Means that though the arithmetic is correct, there are still chances of some errors in the sheet.

Q3. What is the need for companies to make a trial balance?

1. 1. To calculate the status of the financial orders
   2. To tally the balance of cash and the bank
   3. For calculating profit and loss
   4. For checking the accuracy of ledgers arithmetically

The correct option is D) For checking the accuracy of ledgers arithmetically.

Q4. Which of the following is used for checking the arithmetical accuracy of the account books?

1. 1. Ledger
   2. Trial balance
   3. Journal
   4. All of these

The correct option is B) Trial balance

Q5. What is a trial balance?

1. 1. Personal account
   2. Nominal account
   3. Real account
   4. None of these

The correct option is D) None of these.

Q6. Should the total of the trial balance always be equal?

1. 1. Yes, except when the trial balance total is tallied at the end of the year
   2. No, because it depends on the interests of the company
   3. Yes, always
   4. No, because it differs from a balance sheet

The correct option is C) Yes, always

Q7. In which of the following accounts there is a debit balance?

1. 1. Purchase returns
   2. Purchase
   3. Discounts
   4. Owner equity

The correct option is B) Purchase.

Q8. In which of the following accounts there is a credit balance?

1. 1. Wages outstanding
   2. Return inwards
   3. Motor vehicles
   4. Prepaid rent

The correct option is A) Wages outstanding.

Q9. What could be the possible description of a trial balance among the following?

1. 1. Shows the total/balance of books
   2. Shows the entries in the sheet
   3. It is a special system
   4. Showcases the financial position of a company

The correct option is A) Shows the total/balance of books.

Q10. The number of trial balances is:

1. 1. 4
   2. 2
   3. 1
   4. 3

The correct option is D) 3.

Q11. Before the final accounting, what is the necessity to make a trial balance?

1. 1. It helps the accountant to make any amendments if required
   2. It gives the adequate accounting to make the final account
   3. It is used for checking the arithmetical accuracy of ledger accounts
   4. It is used to show that both debit and credit columns are equal in value

The correct option is D) It is used to show that both debit and credit columns are equal in value.

Q12. The wages to be paid to the workers for installing new machine equipment would be debited to:

1. 1. Fixed OverHead Account
   2. Machinery account
   3. Wages account
   4. Factory expenses account

The correct option is B) Machinery account.

Q13. Which of the following options do not count as operating revenue?

1. 1. Goods which are sold for cash
   2. Income from fixed asset sales
   3. Sales on credit
   4. Fee from the sale of services

The correct option is B) Income from fixed asset sales.

Q14. The difference in balances of debit and credit checked by preparing:

1. 1. Balance sheet
   2. Income statement
   3. Trial balance
   4. General journal

The correct option is C) Trial balance.

Q15. With preparing trial balance, it helps to deduct:

1. 1. The error of complete omission
   2. Compensating error
   3. Error of principle
   4. Clerical error

The correct option is D) Clerical error.

Q16. In which of the given accounts the normal balance is considered as debit?

1. 1. Prepaid rent
   2. Rent revenue
   3. Payable rent
   4. Unearned rent revenue

The correct option is A) Prepaid rent.

Q17. The suspense accounts which come under trial balance is marked in:

1. 1. Balance sheet
   2. Trading account
   3. Income statement
   4. Profit and loss statement

The correct option is A) Balance sheet.

Q18. What is a trial balance?

1. 1. To prove error-free journal/ledger
   2. A formal financial statement
   3. Providing the balance of each account used actively
   4. Provide the listing of every account

The correct option is C) Providing the balance of each account used actively.

Q19. In which of the following options it is counted as a debit balance?

1. 1. Bank loan
   2. Cash
   3. Payable account
   4. Owner equity

The correct option is B) Cash.

Q20. Which of the methods is used to create a trial balance?

1. 1. Compound method
   2. Total method
   3. Balance method
   4. All of the above

The correct option is D) All of the above.