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ASSIGNMENTS

THEORETICAL QUESTIONS 

A. Objective Type Questions:

I. Point out the suitable alternative answers to the following questions:

1. Assets account show …… balance.

(a) debit                                   (c) either debit or credit

(b) credit                                 (d) plus.

2. Trial balance is prepared according to …… method.

 (a) balance                              (b) total

(c) total and balance                (d) all the above.

3. The balance of …… account will be shown at the debit column of trial balance.

(a) cash                                    (b) creditors

(c) bank overdraft                   (d) capital.

4. Trial balance fails to detect ….. .

(a) errors of omission in original books           (c) compensating errors

(b) errors of principle                                      (d) all the above.

5. Trial balance is ….. .

(a) a statement                                                 (c) a summary

(b) Locating errors of principle                       (d) None of the above.

6. Preparation of trial balance is ….. .

(a) optional                                                      (b) compulsory.

7. The preparation of a trial balance helps in :

(a) Locating errors of complete omission.       (c) Locating errors of commission

(b) Locating errors of principle                       (d) None of the above.

8. The form listing the balances and the title of the accounts in the ledger on a given date is the :

(a) Income statement                                      (b) Balance sheet

(c) Retained earnings statement                      (d) Trial Balance.

Ans. 1. (a) 2. (d) 3. (a) 4. (d) 5. (a) 6. (a) 7. (c) 8. (d).

 

II. Point out whether the following statements are True or False:

  1. Trial balance is the conclusive proof of accuracy in the books of accounts.
  2. Errors of omission in original books do not affect the agreement of trial balance.
  3. Preparing trial balance according to balance method is the best method.
  4. Errors of principles are committed due to misunderstanding of capital and revenue concepts and expenditure.
  5. Trial balance is a statement, not an account.
  6. All revenue and expenses accounts appearing in trial balance are transferred to the Trading and Profit and Loss A/c.
  7. If the Trial Balance does not tally, it indicates that some errors have been committed.

Ans. 1. False 2. True 3. True 4. True 5. True 6. True 7. True.

B. Very Short Answer Type Questions : 

  1. Give four functions of trial balance.
  2. Is it compulsory that the debit and credit side of trial balance must tally ?
  3. How is the preparation of trial balance useful ?

C. Short Answer Type Questions : 

  1. Does the trial balance disclose all errors?
  2. Enumerate the errors which are not detected by trial balance.
  3. Is trial balance an account ? If not, explain why ?
  4. How will an error be located if the posting is made at the wrong side of an account ?
  5. 5 . Explain compensating error with a suitable example.
  6. State the meaning of trial balance.
  7. What is the purpose of preparing trial balance ?
  8. Write two objectives of preparing trial balance.

D. Long Answer Type Questions : 

  1. What is a trial balance ? What are the different columns of a trial balance ? Explain the different methods of preparing trial balance.
  2. Define trial balance. Why is it prepared ? Is the trial balance a conclusive proof of arithmetical accuracy in the books of accounts ?
  3. Bring out clearly the purpose and limitations of trial balance.
  4. ” Is trial balance a conclusive proof of the accuracy oft he books of accounts”? Give examples in support of the answer.
  5. “Is trial balance a conclusive proof of the accuracy of the books of accounts.” If not, what are the errors which remain undetected inspire of its agreement.
  6. If a trial balance tallies. can it be concluded that there is no error ?
  7. Explain the meaning and objective of trial balance.

PRACTICAL QUESTIONS 

1. From the following trial balance (containing obvious errors) prepare a correct trial balance:

Name of the Accoun                                                                           Dr.                              Cr.

$                                  $

Purchases ………………………………………………………………………….. . 6,000

Reserve fund ………………….. ……………………………………………….. . 2,000

Sales …………………………………………………………………………………                                          10,000

Purchases returns ………………………………………………………………..    100

Sales returns …………………………………………………………………………..                                     200

Opening stock …………………………………………………. …………………… 3,000

Closing stock …………………….. …………… …………… ………………. …..                                     4,000

Expenses ………. ………………………………………………………………. : …..                                    2,000

Outstanding expenses .. …………………. ……………………………………….. 200

Bank balances … .. ……………………………………………………………………500

Assets …………………………… ………………………………………………………5,000

Debtors ……………….. ………………………………………………………………..                                   8,000

Creditors …. ……. ……………………………………………………………………..                                   3,000

Capital Ale ……………………………………………………………………………. .9,400

Suspense Ale being the difference in books …………………………………1,000

                                                                                                                                             27,200                         27,200 

[Ans. Total of Redrafted Trial Balance = $ 24,700]

2. Transactions during the month were :

2006

May2   Sold goods to Pawan Cash Rs. 10,000 and credit ……………………………………….. .200

May 3  Sold to Dara ……. ………………………………………………………………………….. … ……. .11000

May 5  Bought from Harshita …………………………………………………………………. : ………… 1200

May 8  Sold to PuniL .. … …………………………………………………………………….. ….. …… ……500

May 15            Received from Rohan ….. ……… .. …….. ……………………………. …. ………….1500

May 18 Received from Dara …………………………. …………………… .. ….. ………… ……………2000

Allowed him discount …. ………… ……………….. …………. ……. ….. ……………… ……50

May20 Accepted Harshita’s draft at three months ……………………………….. ….. ….1500

May 2 I Sold goods to Imtiyaz ………………………………….. ………………………………………….800

May 22 Paid rent………. ……………………………………………………………………………………….. 150

May 24 Sold to Pun it……………………………………………………………………….. ………………… 1,000

May 30 Paid salaries in cash …. …… …… …. ………. .. …. .. .. .. …… …. .. …. .. …. …. .. .. …. . 300

[Post the above directly to the ledger and take out a trial balance. [Ans. Total of Trial Balance $ 26,800]

3. Record the following transactions in the journal of the Standard Furniture Mart. Post them into ledger account and draft a trial balance.

2006

Jan. 1   Started business with cash $ 40.000.

Jan. 2   Deposited into bank $ 19,000.

Jan. 3   Purchased machinery for $ 15.000 from Naresh and gave her a cheque for the amount.

Jan. 15 Paid installation charges of machinery $ 1.1 00.

Jan. 20 Purchased timber from Adi at the list price of $ 2,000. He allowed 10% trade discount.

Jan. 23 Furniture costing $ 500 was used in furnishing the office.

Jan. 25 Sold furniture to A vi at the list price of $ 1,000 and allowed him 5% trade discount.

Jan. 28 Received a cheque from A vi for $ 930 in full settlement and sent the cheque to bank.

Jan. 29 Sent to Adi in full settlement a cheque for $ 1,750.

Jan. 31 Paid wages $ 350 and rent $ 200.

[Ans. Total of Trial Balance $ 41,000)

4. On 1st April, 2006, Mr. David commenced restaurant business with a capital of $ 10,000. of which $ 2,000 were paid into State Bank of India and $ 8,000 were retained as cash. Enter his transactions in proper books, post to ledger and take out trial balance as on 30th April, 2006 :

2006                                                                                                                                        $

April2 Purchased goods at auction for cash ……………………………………. …………………… .7300

April3 Bought furniture and fitting for cash …………… ………………………. … ……………….. .380

April4 Sold juice to Adi on credit ……………………………………………… ……. ….. …………… .70

AprilS Purchased goods from Chaman Lal & Co ………….. ……… …… ………………………. … .280

April 8 Draw from bank cash for office ………. ……………………. ….. ………………………….. … .250

April 10 Paid Goyal & Co. in full settlement… ……………………………………… ….. ……………. .270

April 17 Bought goods for cash with ………………………. ……………… ……………………………. .100

April24 Received cash from Adi …………… ……………………………………… ………. …………… .65

Allowed him discount ……………………. …………………………………….. ………………… 55

April25 Bought goods from Amit goods ……………………………………………………………….. .150

April26 Sold goods to Mr. Dogra ………………………………………………………………… ………. .36

April28 Cash sales to· Anshul ………………….. …………………………….. …………………………… .1290

April 29 Paid salary for the month by cheque ……………………….. …………….. : ……………….. .50

April29 Paid rent for the month by cheque ……………………………………………………………. .100

April29 Paid general trade expenses ……………………………………………………………………… .80

April 30 Paid cash into bank …………………………………… …………………………………………… .100

April 30 Returned goods to Ankita …………………………………….. ….. …………………………… .50

April 30 Received back goods from Saroj . . … . . .. . ….. … .. . …. .. . .. .. … . . … . ….. … . . .. 16

[Ans. Total of Trial Balance = $ 11.556)

5. Prepare a trial balance from the following balances of ledger accounts.

Cash 41,733 ; Expenses $ 12,150 ; Sales $ 1,46,616 ; Fixed Assets $ 12,000 ; Purchases $ 1.10,850 ; Accounts Receivables $ 24,436 ; Bills Payables $ 50,000 ; Creditors $ 8,553 ; Merchandise $ 4,000.

[Ans. Total of Trial Balance $ 2,05,169)

6. Mr. Harsh started his business with the following assets and liabilities :

2005                                                                                                                            $

Jan. 1 Cash in hand ………………………………………………………………………………………….20000

Stock in hand ………………………………………………………………………………………… 25000

Debtors : Atul & Bros ……………………………………………………………………….. …20000

Arora &Co ……………………………………………………………………… ……………….15000

Creditors : Sub hash Bros ………………………………………………………………………. . .10000

Rana& Co . ………………………………………………………….. ………….. ………………5000

His transactions for the month were :

Jan. 2 Sold goods to Mahesh subject to a trade discount of 10% …………………………….. .10000

Jan. 4 Received from Rajesh & Co ……………………………………………. ……………………… ..14500

Discount allowed…………………………………………………………………… .. …. ………….. 500

Jan. 6 Settled Raju & Co.’s account deducting 5% for cash discount

Jan. 10 Purchased stationery articles ……………………………………………………. …………..1500

Jan. 12 Paid rent for the month ………………………………………………………………………….. ..100

Jan. 13 Bought goods from Mohit & Co ………………………………………………………………. .250

Jan. 16 Bought goods from Mohit & Co ………………………………………………………………. .30000

Jan. 20 Paid Sub hash & Bros. in full settlement of account …………………………………….. .9500

Jan. 24 Withdrew cash for personal expenses ……………………………………………………….. ..500

Jan. 26 Issued a credit note to Mr. Mahesh for the goods damaged in transit …………….. .1000

Jan. 29 Returned goods to Mohit & Co. and received their credit note ………. ….. ………… .5000

Jan. 29 Paid Mohit & Co. on account.. ……………………………………………. ………………….. ..10000

Discount allowed … …… ….. …… …… ….. …… . …. . ….. …. . …. . … .. . … . . . . . .. . .. 250

Jan. 31 Cash sales …………….. ……………………………………………… ………………………………. .20000

Enter the above transactions in the Journal of Harsh. Post them into ledger and prepare a trial balance.

[Ans. Total of Trial Balance $ 1,14,750]

7. Journalise the following transactions, post them into ledger and prepare a trial balance :

2006                                                                                                                            $

Jan. 1 Commenced business with cash………………………………………………………………… 5,000

Jan. 3 Deposited in Bank…………………………………………………………………………………… 3,000

Jan. 4 Bought furniture from James & Co. ………………………………………………………….. 500

Jan. 5 Bought goods from Miss Jenny…………………………………………………… …………….1,000

Jan. 6 Sold goods to Mary . .. .. .. . .. .. .. .. .. .. .. .. .. . .. .. .. .. .. . .. .. .. .. .. . .. .. . .. .. . .. .. .. .. . 600

Jan. 7 Received cash from Mary … …… …… ….. …………. ….. .. .. …….. ….. … .. … ….. ……….190

Allowed him discount. .. …………… …… …………………………. ……………………………. 10

Jan. 10 Mary is declared insolvent. A first composition of 25 P in a rupee is received

Jan. 12 Bought goods from Ratan …………. ……… ………….. .. …. …. … .. ….. …. .. ………. …. 1 ,200

Jan. 13 Sold goods for cash to Mahendra .. ……………. ……….. ….. .. … … .. .. .. .. .. .. .. .. .. .. .. 500

Jan. 15 Paid cash to Ankit ………………………………………………………………………………….. 980

Discount allowed ………. ….. ………… ………………… ………………….. …………………… .. 20

Jan. 17 Withdrew from Bank …………… ………………………………. …. …………………………….. 1,000

Jan. 19 Paid cash to Ratan …………………………………………………………………………………….. . . 1,150

Discount allowed……….. ………………………. ………. ………………………… ……… …………… 50

Jan. 22 Received second and final composition of 25 P from Mary

Jan. 25 Bought goods for cash from Ashish ………………………………………. …………………. .70

Jan. 28 Paid for stationery ……………………… …………………………………………….. ….. ………. .50

Jan. 31 Provide depreciation on Furniture at l% p.m.

Jan. 31 Interest on Capital at 1/2% p.m.

Jan. 31  Salary due to clerk………… ………………………………………………………. ………………. 150

[Ans. Total of Trial Balance $ 6,845]

8. On 1st July, 2005, M/s Sharma & Co., New Delhi had the following assets and liabilities:

Cash in hand $ 870 ; Goods in stock $ 13,770; Owing by Mehra & Co. $ 2,400 ; Owing to Tarun & Co.$ 1 ,800 ; Bank overdraft $ 4,500. –

2006                                                                                                                                        $

July 1 Bought goods from Kapoor & Co ……………………………………………………………. ..360

July 4 Sold goods to Sharma & Co …………………………………………………………………….. ..1200

July 5 Bought goods for cheque ………………………………………………………………………. ..360

July 6 Bought goods from Garg & Co …………………………………….. _. ………………………. .1800

July 7 Sharma & Co. returned damaged goods …………………………………………………… ..60

July 8 Cash sales of goods ……………………………………………………………………. ………. …. .150

July 9 Paid cash into bank …………………………………………………………………………… ……. .300

July 9 Paid rent of shop …………………………………………………………………………………. .180

July 10 Bought goods from Kapoor & Co. and accepted their bill drawn on us ……………2190 .

July 12 Returned goods to Kapoor & Co ……………………………………………………………… ..170

July 15 Received from Goyal & Co. in full settlement of our account

The balance to be treated as discount.. ……………………………………………………. … ..2200

July 20 Paid to Natrajan & Co ……………………………………………………………………………. .600

and got cash discount.. ……………………………………………………………………………. .30

July 20 Paid into Bank ………………………………………………………………………………………. .50

July 20 Withdrew from Bank for personal expenses ………………………………………………. ..25

Journalize the above transactions including the opening entries in the books of M/s Sharma & Co., New Delhi. Post them into ledger and prepare a trial balance.

[Ans. Capital $ 10,740, Total of Trial Balance $ 21 ,035)

 

9. Record the following transactions in proper books and post them into the ledger and draw out a trial balance :

2006                                                                                                                            $

Jan. 1   Assets : Debtors : Ismail $ 600 : Sujit $ 400 ; Pramod $ 50 ;

Stock $ 1,400 ; Cash in hand $ 495 ; Furniture $ 100.

Liabilities : Creditors : Gopesh Trading Co. $ 400 ; Govind $ 45.

Jan. 2 Sold to Pramod ……………………………. ……………………………………………………….. .1500

Jan. 3 Employed Adi as cashier, received from him security deposit ……………………… .1500

Jan. 6 Paid cash to Gopesh Trading Co ………………………………………………………………. .390

Discount allowed……………………………………………………………………………………. 10

Jan. 11 Ismail cleared his account less 5% cash discount

Jan. 15 Bought goods from Govind …………………………………………………….3,665

Jan. 19 Paid Insurance premium ………………………………………………………………………….. .86

Jan. 20 Received cash from Sujit ……………………………………………………………………….. .212

Allowed her discount …………………………………………………………………………….. .8

Jan. 22 Sold goods to Ismail ………………………………. …………………………………………… ..86

Jan. 23 Sold goods to Sujit ……………………………………………………………………………… ..60

Paid rent of  the ……………………………. …………………………………………….. ………15

Jan. 25 Bought goods from Mls Gopesh Trading Co …………………………………………….. ..945

Jan. 26 Returned defective good~ to Mls Gopesh Trading Co …………………………………. ..45

Ismail returned damaged goods……………………………….. ………………………………… 16

Jan. 27 Govind gives us special allowance for certain defects in goods from them ……. .50

Jan. 27 Goods sold to Mls Garg Bros. on credit ………………………………………………….. ..100

Jan. 28 Received from Shahid amount previously written off as bad debts ……………….. .75

Proprietor took away goods for her private use ……………………. ……………………… .200

Jan. 29 Received cash from Sujit …………………………………………………….. ….. …. ……… ..180

Jan. 30 Sold goods to Pramod ………………………………. : …………………………………………… .400

Jan. 31 Rent due to landlord ………………………………………………………. ………. …………… …. .170

Jan. 31 Paid for stationery . …. . …. ….. …….. ….. ………… … .. .. . ……….. …… ……… .. . . … . 140

[Ans. Capital $ 2.600: Total of final Balance $ 11.156]