Q. If the trial balance does not balance, what is the first step to identify the error?
A.
Recalculate the totals
B.
Check the ledger accounts
C.
Review the journal entries
D.
Consult with an accountant
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Solution
The first step to identify the error when the trial balance does not balance is to recalculate the totals to ensure accuracy.
Correct Answer:
A
— Recalculate the totals
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Q. What happens if an account is omitted from the trial balance?
A.
The trial balance will still balance
B.
The trial balance will be out of balance
C.
It will not affect the financial statements
D.
It will only affect the cash flow statement
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Solution
If an account is omitted from the trial balance, it will cause the trial balance to be out of balance.
Correct Answer:
B
— The trial balance will be out of balance
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Q. What is the effect of a $500 purchase of inventory on the trial balance?
A.
Increase in assets and increase in liabilities
B.
Increase in assets and decrease in equity
C.
Increase in assets and increase in expenses
D.
No effect on the trial balance
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Solution
A $500 purchase of inventory increases assets (inventory) and increases liabilities (accounts payable) if not paid in cash.
Correct Answer:
A
— Increase in assets and increase in liabilities
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Q. What is the effect of a double entry error on the trial balance?
A.
It will still balance
B.
It will cause an imbalance
C.
It will not affect the trial balance
D.
It will only affect the income statement
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Solution
A double entry error will cause an imbalance in the trial balance because it affects the equality of debits and credits.
Correct Answer:
B
— It will cause an imbalance
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Q. What is the typical order of accounts in a trial balance?
A.
Assets, Liabilities, Equity, Revenue, Expenses
B.
Revenue, Expenses, Assets, Liabilities, Equity
C.
Liabilities, Assets, Equity, Revenue, Expenses
D.
Equity, Assets, Liabilities, Revenue, Expenses
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Solution
The typical order of accounts in a trial balance is Assets, Liabilities, Equity, Revenue, and Expenses.
Correct Answer:
A
— Assets, Liabilities, Equity, Revenue, Expenses
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Q. When preparing a trial balance, which of the following should be included?
A.
Only asset accounts
B.
All accounts with balances
C.
Only revenue accounts
D.
Only expense accounts
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Solution
All accounts with balances should be included in the trial balance, regardless of whether they are assets, liabilities, equity, revenue, or expenses.
Correct Answer:
B
— All accounts with balances
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Q. Which accounting principle requires that a trial balance be prepared at the end of an accounting period?
A.
Matching Principle
B.
Revenue Recognition Principle
C.
Going Concern Principle
D.
Accrual Basis of Accounting
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Solution
The Accrual Basis of Accounting requires that a trial balance be prepared at the end of an accounting period to reflect all transactions that have occurred.
Correct Answer:
D
— Accrual Basis of Accounting
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Q. Which accounting principle requires that a trial balance be prepared?
A.
Accrual basis
B.
Going concern
C.
Consistency
D.
Double-entry accounting
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Solution
The double-entry accounting principle requires that a trial balance be prepared to ensure that all transactions are recorded accurately.
Correct Answer:
D
— Double-entry accounting
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Q. Which of the following accounts would NOT appear in a trial balance?
A.
Cash
B.
Accounts Payable
C.
Sales Revenue
D.
Income Statement
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Solution
The Income Statement is not an account but a financial statement; therefore, it would not appear in a trial balance.
Correct Answer:
D
— Income Statement
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Q. Which of the following is a common reason for a trial balance to be out of balance?
A.
Incorrect journal entries
B.
Missing accounts
C.
Transposition errors
D.
All of the above
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Solution
A trial balance can be out of balance due to various reasons including incorrect journal entries, missing accounts, and transposition errors.
Correct Answer:
D
— All of the above
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