The 'Trial Balance' is prepared to: MCQ with Answer and Explanation

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The 'Trial Balance' is prepared to:

A. Prepare cash flow

B. Ascertain profit

C. Check accuracy of posting

D. Determine financial position

Answer: Option C

Solution (By JKSSB Mock Tests)

Primary purpose is to verify arithmetical accuracy of ledger postings.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

When a trial balance does not tally, the difference is transferred to:

A. Profit and Loss account

B. Suspense account

C. Capital account

D. Drawings account

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Correct Answer: Option B

Explanation:
A suspense account is opened to temporarily park the difference.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2

The 'Written Representations' from management are required to:

A. Complement other audit evidence and confirm management's responsibilities

B. Only for fraud

C. Be the sole evidence

D. Replace all other audit evidence

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Correct Answer: Option A

Explanation:
Written representations support, but do not substitute for, sufficient appropriate evidence.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #3

Residential status under the Income Tax Act depends primarily on:

A. Physical presence (number of days) in India during the previous year

B. Location of assets owned

C. Place of birth

D. Citizenship of the individual

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Correct Answer: Option A

Explanation:
An individual's residential status for tax purposes is determined by their period of stay in India during the relevant financial year, irrespective of citizenship.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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