Q. If a company has a trial balance that shows total debits of $50,000 and total credits of $48,000, what is the discrepancy?
-
A.
$1,000 debit error
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B.
$2,000 credit error
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C.
$2,000 debit error
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D.
$1,000 credit error
Solution
The discrepancy is $2,000, indicating that there is a credit error since total debits exceed total credits.
Correct Answer:
B
— $2,000 credit error
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Q. If an error is found in the trial balance, what is the first step to correct it?
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A.
Recalculate the trial balance
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B.
Identify the source of the error
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C.
Prepare adjusting entries
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D.
Consult with an accountant
Solution
The first step to correct an error in the trial balance is to identify the source of the error before making any adjustments.
Correct Answer:
B
— Identify the source of the error
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Q. If the trial balance does not balance, which of the following could be a reason?
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A.
A transaction was recorded twice
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B.
A transaction was omitted
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C.
An incorrect amount was posted
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D.
All of the above
Solution
All of the above reasons can cause a trial balance to not balance, indicating errors in the accounting records.
Correct Answer:
D
— All of the above
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Q. In a trial balance, which of the following would be classified as a liability?
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A.
Accounts Receivable
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B.
Inventory
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C.
Accounts Payable
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D.
Retained Earnings
Solution
Accounts Payable is classified as a liability in the trial balance, representing amounts owed to creditors.
Correct Answer:
C
— Accounts Payable
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Q. In a trial balance, which of the following would indicate a potential error?
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A.
Total debits equal total credits
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B.
Total debits exceed total credits
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C.
Total credits exceed total debits
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D.
Both B and C
Solution
If total debits exceed total credits or total credits exceed total debits, it indicates a potential error in the accounting records.
Correct Answer:
D
— Both B and C
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Q. What is the effect of a $500 error in recording a cash sale on the trial balance?
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A.
Trial balance will show a $500 debit excess
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B.
Trial balance will show a $500 credit excess
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C.
Trial balance will balance correctly
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D.
Trial balance will show a $1000 error
Solution
If a cash sale of $500 is recorded incorrectly, it will create a $500 debit excess in the trial balance.
Correct Answer:
A
— Trial balance will show a $500 debit excess
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Q. What is the impact of an accrued expense on the trial balance?
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A.
Increase assets and decrease liabilities
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B.
Increase liabilities and decrease equity
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C.
Increase expenses and increase liabilities
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D.
No impact on the trial balance
Solution
Accrued expenses increase expenses and increase liabilities, thus impacting the trial balance.
Correct Answer:
C
— Increase expenses and increase liabilities
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Q. What is the impact of recording depreciation on the trial balance?
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A.
Increases total assets
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B.
Decreases total liabilities
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C.
Decreases total equity
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D.
Increases total revenues
Solution
Recording depreciation decreases total equity as it is an expense that reduces net income.
Correct Answer:
C
— Decreases total equity
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Q. When preparing a trial balance, which of the following accounts would typically have a credit balance?
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A.
Accounts Receivable
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B.
Cash
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C.
Accounts Payable
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D.
Inventory
Solution
Accounts Payable typically has a credit balance, reflecting amounts owed to suppliers.
Correct Answer:
C
— Accounts Payable
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Q. Which of the following is a common error that would not be detected by a trial balance?
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A.
Transposition error
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B.
Omission error
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C.
Double entry error
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D.
All of the above
Solution
A trial balance may not detect transposition errors, omission errors, or double entry errors, as these can still result in balanced totals.
Correct Answer:
D
— All of the above
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