If a business completely omits a transaction from its books, what is the usual effect on the trial balance?
Correct answer: D. The trial balance may still agree
- A. The cash account must become overdrawn
- B. The trial balance must show a debit excess
- C. The trial balance must show a credit excess
- D. The trial balance may still agree
Explanation
Complete omission leaves both the debit and credit aspects unrecorded, so the two sides can still remain equal. A trial balance may therefore agree even though the accounts are incomplete.
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About Double Entry and Books of Prime Entry
Double entry records every transaction with equal debit and credit entries, based on the accounting equation and the classification of assets, liabilities, capital, income and expenses. Books of prime entry include the sales, purchases, returns and cash books, journal, and source documents used before transactions are posted to ledger accounts.
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34 free Double Entry and Books of Prime Entry MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
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