Account Case Study

Prepare a Trial Balance from the following information:

	Rs.
Prepaid expenses	5,000
Outstanding rent	2,000
Bad debts recovered	4,000
Interest on Investment	1,000
Creditor	5,000
Bank overdraft	2,000
Discount allowed	800
Due from Debtor	1,200
Investment	15,000
Patents	4,000
Machinery	6,000
Capital	18,000

Gurmeet has already prepared his trial balance, when he was goingthough the books of accounts he could identify an error. Wages paidfor installation of new machinery Rs6000 has been debited to WagesAccount.
Q1.What type of error it is ?
(a)Error of Principle
(b)Error of commission
(c)Error of commission
(d)Compensating error

Q2.Will such error affect the trial balance?
(a)Yes
(b)No
(c)Either yes or no
(d)Neither yes nor no

Q3.How such errors will be rectified ?
(a)Machinery A/c Dr 6000To wages A/c 6000
(b) wages A/c Dr 6000To cash 6000
(c) Wages A/c Dr 6000To Machinery A/c 6000
(d) Machinery A/c Dr 6000To Suspense A/c 6000

Ritu, a fresh graduate joined as an accountant in ABC Ltd . She wastold to prepare the Trial Balance of the organization. As she hadnever prepared Trial balance earlier, she was not feeling confident,therefore she was explained in detail about the features andimportance of Trial Balance.

Q1.When is a Trial Balance prepared?
(a)Before recording the transactions in the Journal
(b)Before Ledger posting
(c)After completion of posting from journal to the ledger
(d)Both a and b

Q2.Which of the following is not a feature of Trial Balance?
(a)It is a complete record of all ledger accounts and cash book
(b) It is prepared as a result of the double entry system of bookkeeping, though it is not a part of it.
(c) It assists in verifying the arithmetic accuracy of posting entriesfrom journal to ledger accounts
(d) It is a conclusive proof of the accuracy of the books of account

Q3.What is the reason behind agreement of total of debit side of TrialBalance with the credit side?
(a)Single entry system
(b)Double entry system
(c)Application of accrual concept
(d)Application of matching concept

Q4.What is the nature of Trial Balance?
(a)Real account
(b)Nominal account
(c)Personal account
(d)List of ledger balances