A suspense account with a credit balance indicates that: MCQ with Answer and Explanation

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A suspense account with a credit balance indicates that:

A. Total of credit column of Trial Balance was higher

B. Total of debit column of Trial Balance was higher

C. Profit is overstated

D. Assets exceed liabilities

Answer: Option B

Solution (By JKExamLibrary)

To force the Trial Balance to tally, a credit balance is placed in the suspense account to compensate for a heavier debit side.

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

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The 'Exchequer Control' in government accounting means:

A. Free spending

B. No control over expenditure

C. Only tax collection

D. Withdrawal of funds only as per parliamentary grants

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Correct Answer: Option D

Explanation:
Exchequer control ensures government spending is in accordance with approved grants.

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

Question #2 Report Error

A: Internal control is a process designed to provide reasonable assurance regarding the achievement of objectives. R: Internal control can guarantee the prevention of all frauds. Choose the correct option.

A. Both A and R are true and R is the correct explanation of A

B. Both A and R are true but R is NOT the correct explanation of A

C. A is true but R is false

D. A is false but R is true

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Correct Answer: Option C

Explanation:
Internal control provides *reasonable* assurance, not absolute assurance, regarding operational efficiency, reliable reporting, and compliance. It cannot guarantee the prevention of all frauds due to inherent limitations like collusion or management override. A is true, R is false.

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

Question #3 Report Error

The 'Impairment of Assets' testing: Goodwill is allocated to:

A. All assets equally

B. Cash-generating units (CGUs) or groups of CGUs that are expected to benefit from synergies

C. Parent company only

D. Individual assets

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Correct Answer: Option B

Explanation:
Goodwill must be tested for impairment at the CGU level.

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