State whether the following statements are ‘True or False’ with reasons.

1) Ledger is a book of Original Entry.
Ans. False. Journal is a book of original entry. From Journal entries are posted into Ledger. Ledger is a book of Final/ Secondary entry. 

2) The process of recording a transaction in the Journal is called Posting.
Ans: The Process of recording transactions in the journal is called ‘Journalizing’.

3) A cash withdrawal from business by the trader should be credited to Drawings A/c
Ans: False. If cash withdrawal from business is for personal use, it is drawings. It should be always be debited to Drawings A/c.

4) Balances of Nominal Accounts are carried forward to the next year.
Ans: False. Nominal Accounts means the accounts which are related to expenses, losses, incomes and gains. Balances of these accounts are not carried forward to the next year. They are transferred to the Trading or Profit & Loss Account of the respective years. 

5) When debit side of an account is greater than the credit side, the account shows a debit balance.
Ans: True. Balancing of Ledger accounts means totalling both the sides of Ledger Account, finding the difference between greater total and, smaller total and recording it on the smaller side. If the debit side total is more than the credit side total, it indicates debit balance. 

6) The name of an account written on top of each account is called ‘Head of Account’.

Ans: True. An Account is a summarised record of transactions related to one person, one property, one head of expense/ loss, or income/gains. To know the record is of which account, the name of that account is written on top in the centre, which is called ‘head of Account.’

7) Agreement of Trial Balance always proves accounting accuracy.
Ans:  False. Agreement of Trial Balance only proves arithmetical accuracy. If it does not tally that means there are errors of wrong posting, wrong totalling, wrong balancing etc. Even when it tallies, there can be Errors of Principle, Errors of complete omission which does not affect the total of Trial Balance. 

8) Trial balance is based on the double entry principle that for every debit there is equal amount of corresponding credit.
Ans: True. Every transaction affect atleast 2 accounts. if one account is the receiver of the benefit, other account is the given of the benefit. Debit and credit effects are given as per rules of debit and credit for Personal A/c, Real A/cs and Nominal Accounts. At the end total debit effects are equal to credit effects in the trial balance they tally.