When a trial balance does not tally, the difference is transferred to: MCQ with Answer and Explanation

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

A. Suspense account

B. Profit and Loss account

C. Capital account

D. Drawings account

Answer: Option A

Solution (By JKSSB Mock Tests)

A suspense account is opened to temporarily park the difference.

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

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Question #1

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In financial management, the 'Modigliani-Miller (MM) Hypothesis without taxes' states that the value of a firm is:

A. Maximized at a debt-equity ratio of 1:1

B. Inversely proportional to its debt level

C. Independent of its capital structure

D. Directly proportional to its debt level

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Correct Answer: Option C

Explanation:
The MM Hypothesis without taxes asserts that in a perfect market, the value of a firm is determined by its real assets and earning capacity, making it completely independent of how those assets are financed (capital structure).

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

Question #2

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The main difference between a partnership and a company is:

A. Company cannot own assets

B. Partnership pays corporate tax

C. Company has separate legal entity, partnership does not

D. Partnership has limited liability

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Correct Answer: Option C

Explanation:
A company is a separate legal entity, while a partnership (except LLP) is not.

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

Question #3

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Under single entry system, opening capital is ascertained by preparing:

A. Profit and loss account

B. Trading account

C. Income and expenditure account

D. Statement of affairs

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Correct Answer: Option D

Explanation:
In single entry, a statement of affairs (similar to balance sheet) is prepared to ascertain opening and closing capital.

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

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