__________ does not help in assuming accuracy of balances of various accounts and preparation of the financial statements.

Totals Method

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Balances Method

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Totals-cum-balances Method

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None of the above

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Solution

The correct option is A Totals Method
In total method, total of each side in the ledger is ascertained separately and shown in the trial balance in the respective columns. However, this method is not widely used in practice, as it does not help in assuming accuracy of balances of various accounts and preparation of financial statements.

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Similar questions

Q. Totals method does not help in assuming _________of balances of various accounts.

State true or false:

1) A Trial balance is an account.
2) A Trial balance is helpful for preparation of final accounts.
3) A Trial balance is most important document.
4) A Trial balance may be prepared on any date.
5) In Trial balance opening stock is recorded in credit balance column.
6) Both sides total of an account are taken in Gross Trial Balance.
7) Purchase account always shows debit balance.
8) A Trial balance is a List of Ledger balances.
9) A Trial balance does not ensure accounting accuracy.
10) A Trial balance shows only arithmetical accuracy.

Q. While preparing the annual financial statements, the balance of rent account should be treated as the balance of a __________.

Q. When preparing the annual financial statements, the balance of prepaid rent account should be treated as a _____________.

M K Limited is a computer hardware manufacturing company. While preparing its accounting records it takes into consideration the various accounting principles and maintains transparency. At the end of the accounting year, the company follows the 'Companies Act and Rules, 2013' for the preparation of its Financial Statements. It also prepares its Income Statement and Balance Sheet as per the format provided in Schedule III to the Act. Its Financial Statements depict its true & fair financial position. For the financial year ending March 31, 2017, the accountant of the company is not certain about the presentation of the following items under relevant Major Heads and Sub Heads, if any, in its Balance Sheet:

(i) Securities Premium Reserve

(ii) Calls in Advance

(iii) Stores and Spares

(a) Advise the accountant of the company under which Major Heads and Sub Heads, if any, he should present the above items in the Balance Sheet of the company,

(b) List any two values that the company is observing in the maintenance of its accounting records and preparation of its financial statements.

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