State whether the following statements are True or False
- Trial Balance is a statement which shows debit balances and credit balances of all accounts in the ledger.
- The total of debit balances and the total of credit balances need not tally, always.
- Trial Balance can be prepared only at the end of an accounting period. It cannot be prepared at any date.
- Trial Balance is the basis on which final accounts are prepared.
- If any error is found in the preparation of a Trial Balance, such errors can be rectified only when the balance sheet is prepared.
- A debit balance is either an asset or expense or loss.
- All the errors committed are not disclosed by the Trial Balance.
- A Trial Balance will disclose errors of principle.
- If any of the GAAP is violated, error resulting from such violation is called “errors of principle.”
- Error of complete omission affects the Trial Balance.
- Error of partial omission does not affect the Trial Balance.
- Error of recording does not affect the Trial Balance.
- Error of posting may or may not affect the Trial Balance.
- When it is difficult to locate and rectify errors, the difference caused due to such errors is transferred to a new and temporary account known as “Suspense Account.”
- When all the errors affecting the Trial Balance are located and rectified, the “Suspense Account” gets closed automatically.
- Journal entries passed to rectify the errors are called “rectifying entries.”
- Suspense Account having credit balance will be shown on the assets side of a balance sheet.
- Excess debit of an account can be rectified by debiting the same amount.
- Short debit of an account can be rectified by further debit (of the short amount) of the same account.
- Suspense Account in the Trial Balance is entered in the Profit and Loss Account.