MCQ's on Trial Balance - Solutions

1. Which of the following is the main purpose of preparing a trial balance?
(A) To ensure all financial statements are prepared.
(B) To check the accuracy of journal entries.
(C) To ensure debit and credit sides of ledgers match.
(D) To balance the cash account.
(E) To calculate profit and loss.

Answer: (C)

2. The trial balance is part of which phase of the accounting process?
(A) First phase
(B) Second phase
(C) Third phase
(D) Final phase
(E) It is not a part of the accounting process.

Answer: (C)

3. If a trial balance tallies, what does it indicate?
(A) The financial statements are ready.
(B) No errors exist.
(C) Only arithmetic accuracy is confirmed.
(D) All transactions are accurate.
(E) The closing inventory is accurate.

Answer: (C)

4. Which of the following accounts will appear on the credit side of a trial balance?
(A) Expenses
(B) Purchases
(C) Capital
(D) Sales Return
(E) Cash

Answer: (C)

5. Which method is most commonly used for preparing a trial balance?
(A) Total method
(B) Balance method
(C) Combined method
(D) Profit and loss method
(E) Ledger method

Answer: (B)

6. What is a limitation of a trial balance?
(A) It cannot detect compensating errors.
(B) It ensures all journal entries are correct.
(C) It can detect missing entries.
(D) It ensures ledger balances are correct.
(E) It prevents errors of principle.

Answer: (A)

7. Which of the following errors will not affect the trial balance?
(A) Omitting a transaction from the journal.
(B) Debiting the wrong account.
(C) Posting an entry twice in the ledger.
(D) Entering wrong amounts on both sides.
(E) All of the above.

Answer: (E)

8. How often is a trial balance typically prepared?
(A) Weekly
(B) Monthly
(C) Quarterly
(D) Yearly
(E) Anytime

Answer: (B)

9. If the debit side of the trial balance is larger than the credit side, what is typically used to balance the trial balance?
(A) An adjusting entry
(B) Suspense account
(C) Income statement
(D) Cash flow statement
(E) General journal

Answer: (B)

10. In a trial balance, the balance of an asset account is recorded on the:
(A) Credit side
(B) Debit side
(C) Either side
(D) Not included
(E) Depends on the account type

Answer: (B)

11. Given the following data, what will be the balance in the cash account?
Opening balance: ₹5,000
Cash received: ₹3,000
Cash payments: ₹2,500
(A) ₹5,500
(B) ₹6,000
(C) ₹5,000
(D) ₹7,500
(E) ₹5,250

Answer: (A)

12. The total of debit balances in a trial balance is ₹50,000, and the total of credit balances is ₹48,000. What is the suspense account balance?
(A) ₹0
(B) ₹2,000 credit
(C) ₹2,000 debit
(D) ₹48,000 credit
(E) ₹50,000 debit

Answer: (C)

13. If the total of the debit side of a trial balance is ₹90,000 and the credit side is ₹85,000, what is the correct entry in the suspense account?
(A) ₹5,000 credit
(B) ₹5,000 debit
(C) ₹5,000 in liabilities
(D) ₹90,000 debit
(E) None of the above

Answer: (A)

14. From the following details, prepare a trial balance:
Purchases: ₹40,000
Sales: ₹60,000
Cash: ₹10,000
Capital: ₹50,000
Inventory: ₹5,000

(A) Trial balance does not tally
(B) Debit total = ₹55,000; Credit total = ₹60,000
(C) Debit total = ₹55,000; Credit total = ₹55,000
(D) Debit total = ₹60,000; Credit total = ₹60,000
(E) Debit total = ₹60,000; Credit total = ₹55,000

Answer: (C)

15. Ram’s account has a balance of ₹25,000 on the credit side, and cash received from Ram is ₹5,000. What is the new balance of Ram’s account?
(A) ₹30,000 credit
(B) ₹20,000 credit
(C) ₹25,000 debit
(D) ₹30,000 debit
(E) None of the above

Answer: (B)

16. In a business, the following transactions occurred:
Sales: ₹70,000
Purchases: ₹50,000
Operating expenses: ₹10,000
What is the gross profit?
(A) ₹10,000
(B) ₹20,000
(C) ₹30,000
(D) ₹40,000
(E) ₹50,000

Answer: (B)

17. You are provided the following balances:
Sales: ₹120,000
Purchases: ₹80,000
Expenses: ₹20,000
Drawings: ₹10,000
What is the net profit of the business?
(A) ₹10,000
(B) ₹20,000
(C) ₹30,000
(D) ₹40,000
(E) ₹50,000

Answer: (C)

18. A firm’s trial balance shows that the total debits are ₹45,000 and total credits are ₹45,000. The trial balance agrees, but the bank reconciliation shows a ₹2,000 error on the bank’s side. What should be done?
(A) Adjust the trial balance.
(B) Do nothing since the trial balance agrees.
(C) Correct the error in the bank reconciliation statement.
(D) Open a suspense account for the ₹2,000.
(E) Add the amount to the capital account.

Answer: (C)

19. If a trial balance shows the following:
Debits: ₹120,000
Credits: ₹125,000
What is the difference in balance, and how should it be treated?
(A) ₹5,000, credited to a suspense account
(B) ₹5,000, debited to a suspense account
(C) ₹5,000, treated as cash balance
(D) No error exists
(E) Balance must be rechecked.

Answer: (A)

20. A ledger shows the following entries for a cash account:
Cash receipts: ₹10,000
Cash payments: ₹5,000
Previous balance: ₹2,000
What is the closing balance of the cash account?
(A) ₹7,000
(B) ₹10,000
(C) ₹12,000
(D) ₹3,000
(E) None of the above

Answer: (A)

21. Which of the following is *not* an objective of preparing a trial balance?
(A) To check the arithmetic accuracy of the ledger accounts
(B) To detect errors of omission
(C) To assist in the preparation of financial statements
(D) To summarize all ledger accounts
(E) To provide an overview of all account balances

Answer: (B)

22. Which of the following types of errors would *not* affect the trial balance?
(A) Error of omission
(B) Error of commission
(C) Compensating errors
(D) Wrong amount entered in both debit and credit sides
(E) All of the above

Answer: (E)

23. Which account is always credited in case of sales?
(A) Purchases Account
(B) Sales Account
(C) Cash Account
(D) Bank Account
(E) Capital Account

Answer: (B)

24. Which of the following methods combines the total method and the balance method in preparing the trial balance?
(A) Total method
(B) Balance method
(C) Combined method
(D) Suspense method
(E) None of the above

Answer: (C)

25. Which of the following statements about the suspense account is *incorrect*?
(A) It is a temporary account.
(B) It is used when trial balance does not tally.
(C) It is used to record errors of principle.
(D) It is closed after identifying the errors.
(E) It helps to continue preparing financial statements.

Answer: (C)

26. What type of balance does a liability account generally have in the trial balance?
(A) Debit balance
(B) Credit balance
(C) It depends on the type of liability
(D) It can have both debit and credit balance
(E) None of the above

Answer: (B)

27. Which of the following would *not* cause a difference in the trial balance?
(A) Posting an entry twice
(B) Omitting a transaction from the journal
(C) Error of principle
(D) Writing the wrong amount on both sides
(E) Posting an incorrect amount in one account

Answer: (C)

28. If a trial balance is not in balance, which of the following should be done first?
(A) Prepare financial statements
(B) Correct the journal entries
(C) Check the addition of both sides of the trial balance
(D) Correct the ledger accounts
(E) Recheck the entries in the journal

Answer: (C)

29. In case of an error in the trial balance, how can the accountant continue with the preparation of financial statements?
(A) By opening a suspense account
(B) By ignoring the error
(C) By using estimates
(D) By adjusting the cash account
(E) By correcting the journal entries immediately

Answer: (A)

30. Which account will typically have a debit balance in a trial balance?
(A) Sales Account
(B) Capital Account
(C) Purchases Account
(D) Creditors Account
(E) Bank Loan Account

Answer: (C)

31. The total debits and credits in the trial balance of XYZ Co. are as follows:
Debit total: ₹80,000
Credit total: ₹78,000
What should be the balance in the suspense account?
(A) ₹2,000 credit
(B) ₹2,000 debit
(C) ₹2,000 income
(D) No suspense account is needed
(E) ₹80,000 credit

Answer: (A)

32. From the following information, calculate the gross profit:
Sales: ₹50,000
Purchases: ₹30,000
Closing inventory: ₹5,000
Opening inventory: ₹8,000
(A) ₹27,000
(B) ₹25,000
(C) ₹20,000
(D) ₹30,000
(E) ₹23,000

Answer: (B)

33. A company has the following balances:
Sales: ₹200,000
Purchases: ₹150,000
Expenses: ₹30,000
Calculate the net profit:
(A) ₹20,000
(B) ₹30,000
(C) ₹50,000
(D) ₹100,000
(E) None of the above

Answer: (C)

34. If the total debit side of the trial balance is ₹145,000 and the total credit side is ₹140,000, what is the discrepancy?
(A) ₹5,000 credit
(B) ₹5,000 debit
(C) No error
(D) Error in purchases account
(E) Difference must be corrected in journal

Answer: (A)

35. You are provided with the following balances for a trial balance:
Cash: ₹10,000
Purchases: ₹20,000
Capital: ₹15,000
Sales: ₹25,000
What is the total of the debit side of the trial balance?
(A) ₹30,000
(B) ₹45,000
(C) ₹40,000
(D) ₹20,000
(E) ₹35,000

Answer: (A)

36. In the trial balance of ABC Ltd., the total of credit balances is ₹120,000 and the debit total is ₹115,000. What should be done to balance the trial balance?
(A) Open a suspense account for ₹5,000 debit
(B) Check the ledger entries
(C) Prepare the financial statements directly
(D) Open a suspense account for ₹5,000 credit
(E) Ignore the difference

Answer: (A)

37. From the following balances, calculate the trial balance total:
Cash: ₹5,000
Purchases: ₹15,000
Sales: ₹20,000
Capital: ₹10,000
(A) Debit total = ₹20,000, Credit total = ₹20,000
(B) Debit total = ₹25,000, Credit total = ₹30,000
(C) Debit total = ₹25,000, Credit total = ₹25,000
(D) Debit total = ₹30,000, Credit total = ₹30,000
(E) Debit total = ₹15,000, Credit total = ₹15,000

Answer: (C)

38. XYZ Ltd. shows a debit balance of ₹40,000 for cash and a credit balance of ₹60,000 for creditors. If sales were ₹80,000, what should be the credit total of the trial balance?
(A) ₹80,000
(B) ₹100,000
(C) ₹60,000
(D) ₹120,000
(E) ₹40,000

Answer: (B)

39. If a business has a capital balance of ₹50,000, a purchase balance of ₹20,000, and a sales balance of ₹70,000, what is the total of the credit side of the trial balance?
(A) ₹50,000
(B) ₹70,000
(C) ₹90,000
(D) ₹120,000
(E) ₹100,000

Answer: (C)

40. If a company’s trial balance shows the following entries:
Cash: ₹12,000 debit
Sales: ₹25,000 credit
Purchases: ₹15,000 debit
What is the total of the credit side?
(A) ₹12,000
(B) ₹15,000
(C) ₹25,000
(D) ₹40,000
(E) ₹37,000

Answer: (C)

41. Which of the following can cause an imbalance in the trial balance?
(A) Posting the correct entry twice
(B) Recording the same amount on both sides of the journal

Answer: (C)

42. What is the significance of using the total method in preparing a trial balance?
(A) It saves time by not balancing individual ledger accounts.
(B) It directly prepares financial statements.
(C) It avoids errors in the journal.
(D) It helps in detecting errors of omission.
(E) It is widely used in final accounts.

Answer: (A)

43. A trial balance can detect which of the following types of errors?
(A) Compensating errors
(B) Errors of principle
(C) Clerical errors
(D) Errors of omission
(E) None of the above

Answer: (C)

44. What happens if the trial balance agrees, but the balance sheet does not?
(A) The financial statements are still correct.
(B) An error of principle likely occurred.
(C) The trial balance must be checked again.
(D) A suspense account should be opened.
(E) The accountant made an error in journalizing.

Answer: (B)

45. If a trial balance does not agree, which of the following *cannot* be the reason?
(A) A compensating error
(B) Posting one side of an entry
(C) Omitting one side of the entry
(D) Transposing numbers in the ledger
(E) Incorrectly totaling an account

Answer: (A)

46. Which of the following is *not* a characteristic of a trial balance?
(A) It shows all ledger account balances.
(B) It ensures arithmetical accuracy of accounts.
(C) It is a conclusive proof of the accuracy of accounts.
(D) It forms the basis for preparing financial statements.
(E) It lists debit and credit balances separately.

Answer: (C)

47. What is the main purpose of preparing a trial balance?
(A) To calculate the net profit of the business.
(B) To detect errors in journal entries.
(C) To check arithmetical accuracy of ledger accounts.
(D) To record transactions.
(E) To verify inventory levels.

Answer: (C)

48. Which of the following is a method for preparing a trial balance?
(A) Financial Statement Method
(B) Total and Balance Method
(C) Accrual Method
(D) Expense and Income Method
(E) Journal Method

Answer: (B)

49. Which of the following types of errors will *not* affect the trial balance?
(A) Errors of omission
(B) Posting to the wrong account
(C) Transposition error in one account
(D) Incorrect totaling of the trial balance
(E) Posting an entry twice to the same side of the account

Answer: (A)

50. What is the usual frequency for preparing a trial balance to check arithmetical accuracy?
(A) Annually
(B) Quarterly
(C) Monthly
(D) Weekly
(E) Daily

Answer: (C)

51. Which of the following *cannot* be used to balance a trial balance if it does not tally?
(A) Journal entry
(B) Suspense account
(C) Bank reconciliation
(D) Ledger review
(E) None of the above

Answer: (C)

52. What does the agreement of a trial balance confirm?
(A) All transactions are correctly posted.
(B) There are no errors in the accounting records.
(C) There are no compensating errors.
(D) Arithmetic accuracy of ledger postings.
(E) All journal entries are correct.

Answer: (D)

53. Which of the following errors will *not* be detected by a trial balance?
(A) A missing transaction in both debit and credit sides.
(B) Posting the wrong amount to one account.
(C) A double entry in the same account.
(D) Posting an entry to the wrong side of the ledger.
(E) An error in the ledger totaling.

Answer: (A)

54. Which of the following is a limitation of a trial balance?
(A) It can detect errors of omission.
(B) It detects compensating errors.
(C) It only checks arithmetical accuracy, not complete accuracy.
(D) It can detect all types of accounting errors.
(E) It is required by law.

Answer: (C)

55. What does the balance method of trial balance preparation involve?
(A) Listing only the totals of debit and credit sides of accounts.
(B) Recording all transactions in the journal.
(C) Entering only the net balances of accounts.
(D) Combining the total and balance methods.
(E) Entering all account transactions separately.

Answer: (C)

56. Which of the following is an objective of preparing the trial balance?
(A) To finalize the ledger accounts.
(B) To ensure that financial statements are correct.
(C) To provide an overview of all accounts.
(D) To ensure that all transactions have been journalized.
(E) To prepare the bank reconciliation.

Answer: (C)

57. Given the following ledger balances, what is the balance of the cash account?
Opening Balance: ₹5,000
Cash Receipts: ₹8,000
Cash Payments: ₹6,000
(A) ₹9,000
(B) ₹5,000
(C) ₹7,000
(D) ₹6,000
(E) ₹8,000

Answer: (C)

58. A company has the following balances in its trial balance:
Sales: ₹50,000 (credit)
Purchases: ₹30,000 (debit)
Salaries: ₹10,000 (debit)
Rent: ₹5,000 (debit)
What is the total of the debit side of the trial balance?
(A) ₹30,000
(B) ₹45,000
(C) ₹50,000
(D) ₹60,000
(E) ₹55,000

Answer: (B)

59. If the total debit balances in a trial balance amount to ₹150,000 and the total credit balances amount to ₹145,000, what is the balance in the suspense account?
(A) ₹5,000 debit
(B) ₹5,000 credit
(C) ₹150,000 debit
(D) ₹145,000 credit
(E) No balance is required

Answer: (B)

60. What is the trial balance total for the following accounts?
Cash: ₹20,000 (debit)
Capital: ₹50,000 (credit)
Sales: ₹30,000 (credit)
Purchases: ₹10,000 (debit)
Expenses: ₹5,000 (debit)
(A) ₹85,000 on both sides
(B) ₹65,000 debit, ₹80,000 credit
(C) ₹35,000 debit, ₹80,000 credit
(D) ₹95,000 on both sides
(E) ₹100,000 debit, ₹100,000 credit

Answer: (A)

61. In the trial balance of ABC Ltd., the total of debit balances is ₹180,000, while the total of credit balances is ₹175,000. What is the value of the suspense account?
(A) ₹5,000 credit
(B) ₹5,000 debit
(C) ₹180,000 credit
(D) ₹175,000 debit
(E) No suspense account is needed.

Answer: (A)

62. What is the total debit balance in the trial balance if the following accounts are given?
Purchases: ₹40,000
Rent: ₹5,000
Cash: ₹10,000
Trade Payables: ₹20,000 (credit)
Sales: ₹50,000 (credit)
(A) ₹35,000
(B) ₹55,000
(C) ₹80,000
(D) ₹65,000
(E) ₹90,000

Answer: (D)

63. A company’s trial balance shows the following:
Debit total: ₹100,000
Credit total: ₹97,000
What is the balance of the suspense account?
(A) ₹3,000 debit
(B) ₹3,000 credit
(C) ₹97,000 credit
(D) ₹100,000 debit
(E) No balance required.

Answer: (B)

64. The following entries appear in a company’s trial balance:
Purchases: ₹20,000 (debit)
Sales: ₹40,000 (credit)
Salaries: ₹10,000 (debit)
Rent: ₹5,000 (debit)
What is the total of the credit side?
(A) ₹30,000
(B) ₹40,000
(C) ₹25,000
(D) ₹50,000
(E) ₹35,000

Answer: (B)

MCQ’s on Trial Balance Download