ch-11

Question 1

State the characteristics of trial balance

Answer 1

1. It is a list of balances of ledger accounts and cash book
2. Not a part of double entry system.It is a result of double entry system
3. Can be prepared on any date if the accounts are balanced
4. Verifies the arithmetical correctness of posting entries from journal to ledger
5. Not a conclusive proof of accuracy of books of account since some errors are disclosed by trial balance
6. Helpful in preparing trading account, profit and loss account and balancesheet

Question 2

State the objectives/Functions of a trial balance

Answer 2

1.To ascertain the arithmetical correctness of ledger
2.To help prepare final accounts
3.Summary of each account
Helps in locating errors

Question 3

State the limitations of trial balance

Answer 3

1. Errors of principle
2. Compensating errors
3. Transactions completely omitted from recording in the books of account
4. Recording both aspects of transaction twice in the books of account
5. Posting correct amount on the correct side but the wrong account is not reflected by trial balance
6. Wrong amount recorded in the books of original entry and same amount is debited and credited, is not brought out by trial balance