Q. How is accumulated depreciation reflected in the trial balance?
-
A.
As an asset
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B.
As a liability
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C.
As a contra asset
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D.
As an expense
Solution
Accumulated depreciation is recorded as a contra asset, reducing the total value of fixed assets on the balance sheet.
Correct Answer:
C
— As a contra asset
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Q. If the trial balance does not balance, what is the first step to investigate?
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A.
Check for missing transactions
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B.
Recalculate the totals
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C.
Review the journal entries
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D.
Verify account balances
Solution
The first step is to check for missing transactions, as this could cause the trial balance to be unbalanced.
Correct Answer:
B
— Recalculate the totals
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Q. What happens if an error is found after the trial balance is prepared?
-
A.
The trial balance must be discarded
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B.
Adjusting entries must be made
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C.
The error can be ignored
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D.
The financial statements can still be prepared
Solution
If an error is found, adjusting entries must be made to correct the accounts before finalizing the financial statements.
Correct Answer:
B
— Adjusting entries must be made
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Q. What is the normal balance of an expense account?
-
A.
Debit
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B.
Credit
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C.
Neither
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D.
Both
Solution
The normal balance of an expense account is a debit, which increases the expense when recorded.
Correct Answer:
A
— Debit
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