S1: The Profit and Loss Account shows the financial position of the business. S2: The Balance Sheet shows the financial position of the business. Which statement(s) is/are correct? MCQ with Answer and Explanation
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Question #1
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Which of the following errors will NOT be revealed by a Trial Balance?
Correct Answer: Option A
Explanation:
Errors of principle (like treating capital expenditure as revenue) affect debit and credit equally, hence the Trial Balance will still agree.
Errors of principle (like treating capital expenditure as revenue) affect debit and credit equally, hence the Trial Balance will still agree.
This question belongs to:
Accountancy and Statistics
Accountancy and Book Keeping
Question #2
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If a cheque of Rs 1,000 is issued but recorded in the cash column of the Cash Book instead of the bank column, what is the effect on the bank balance?
Correct Answer: Option D
Explanation:
Since the bank column was not reduced (credited), the bank balance as per the Cash Book remains artificially high (overstated).
Since the bank column was not reduced (credited), the bank balance as per the Cash Book remains artificially high (overstated).
This question belongs to:
Accountancy and Statistics
Accountancy and Book Keeping
Question #3
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In the preparation of Income and Expenditure Account, outstanding expenses at the end are:
Correct Answer: Option A
Explanation:
Outstanding expenses increase the total expense for the period.
Outstanding expenses increase the total expense for the period.
This question belongs to:
Accountancy and Statistics
Accountancy and Book Keeping
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