4. Trial balance

Question 1

What is a trial balance?

Answer 1

A trial balance is a listing of ledger balances on one particular date.

Question 2

Why is a trial balance prepared?
Or What are the purposes of preparing trial balance?
Or State the functions of trial balance.

Answer 2

1. To check for complete and proper double entries made in the ledger
2. To help in the preparation of financial statement.

Question 3

Identify the class / nature of the following item and state if the item appears in credit or debit column of the trial balance:
Advertising

Answer 3

Expense; Debit

Question 4

Identify the class / nature of the following item and state if the item appears in credit or debit column of the trial balance:
Bank charges

Answer 4

Expense; Debit

Question 5

Identify the class / nature of the following item and state if the item appears in credit or debit column of the trial balance:
Capital

Answer 5

Equity; Credit

Question 6

Identify the class / nature of the following item and state if the item appears in credit or debit column of the trial balance:
Drawings

Answer 6

Contra equity; Debit

Question 7

Identify the class / nature of the following item and state if the item appears in credit or debit column of the trial balance:
Fixture and Fittings

Answer 7

Asset; Debit

Question 8

Identify the class / nature of the following item and state if the item appears in credit or debit column of the trial balance:
Heat and Light

Answer 8

Expense; Debit

Question 9

Identify the class / nature of the following item and state if the item appears in credit or debit column of the trial balance:
Insurance

Answer 9

Expense; Debit

Question 10

Identify the class / nature of the following item and state if the item appears in credit or debit column of the trial balance:
Interest on loan

Answer 10

Expense; Debit

Question 11

Identify the class / nature of the following item and state if the item appears in credit or debit column of the trial balance:
Loan

Answer 11

Liability; Credit

Question 12

Identify the class / nature of the following item and state if the item appears in credit or debit column of the trial balance:
Cost of Sales

Answer 12

Expense; Debit

Question 13

Identify the class / nature of the following item and state if the item appears in credit or debit column of the trial balance:
Sales Revenue

Answer 13

Revenue; Credit

Question 14

Identify the class / nature of the following item and state if the item appears in credit or debit column of the trial balance:
Sales returns

Answer 14

Contra revenue; Debit

Question 15

Identify the class / nature of the following item and state if the item appears in credit or debit column of the trial balance:
Inventory

Answer 15

Asset; Debit

Question 16

Identify the class / nature of the following item and state if the item appears in credit or debit column of the trial balance:
Accumulated Depreciation

Answer 16

Contra asset; Credit

Question 17

Identify the class / nature of the following item and state if the item appears in credit or debit column of the trial balance:
Allowance for impairment of trade receivables

Answer 17

Contra asset; Credit

Question 18

Identify the class / nature of the following item and state if the item appears in credit or debit column of the trial balance:
Accrued insurance

Answer 18

Liability; Credit

Question 19

Identify the class / nature of the following item and state if the item appears in credit or debit column of the trial balance:
Bank overdraft

Answer 19

Liability; Credit

Question 20

The trial balance shows discounts $140 in the credit column. Is this discount allowed or received? Why?

Answer 20

Discount Received. It is an income.

Question 21

The trial balance shows rent $1 440 in the credit column. Is this rent expense or income?

Answer 21

Rent income.

Question 22

Identify the class / nature of the following item and state if the item appears in credit or debit column of the trial balance?
Trade payable

Answer 22

Liability; Credit

Question 23

If bookkeeper failed to do proper double entry, will trial balance balance?

Answer 23

No. Trial balance can only balance if proper double entries are done.