Trial Balance and Rectification of Errors Test 18

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Trial Balance and Rectification of Errors Test 18

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Question 1
1 / -0

Which of the following statements is correct?

A
The trial balance is prepared after preparing the profit and loss account.

B
The trial balance shows only balances of assets and liabilities

C
The trial balance shows only nominal account balances.

D
The trial balance has no statutory importance from the point of view of law.

Solution

Trial balance is prepared by taking all the ledger account balances in a list. Trial balance is prepared to check the arithmetical accuracy of books of account. If trial balance agrees, it is assumed that the books of account are arithmetical correct. So, it is prepared just to check that all posting are done. Trial balance has no statutory importance from the point of view of law.
Question 2
1 / -0

Which of the following error will disturb the balancing of the trial balance?

A
Recording in the purchases journal an invoice for acquiring a non current asset for Rs$$60,000$$.

B
Adding up the returns inwards journal as Rs$$11,400$$ instead of Rs$$12,600$$.

C
Recording a sales invoice for Rs 5,600$$ as Rs $$6,500$$ in the sales journal.

D
Failing to record a purchase invoice for Rs $$54,000$$ in the purchases journal.

Solution

A trial balance is prepared to check the arithmetical/mathematical accuracy of the balance of the books of the account. Adding up return inwards journal as RS-11,400 Instead of RS-12,600 is an error of commission hence, will be detected as its an arithmetical error.
Question 3
1 / -0

While carrying forward the total of one page of the Purchases Book to the next, the amount of Rs$$12,350$$ was written as Rs$$13,250$$. If this error located after preparation of trial then which of the following rectification entry is correct?

A
Purchases A/c Dr. $$900$$
To Profit & Loss Adj. A/c $$900$$

B
Purchases A/c Dr. $$900$$
To Suspense A/c $$900$$

C
Profit & Loss Adj. A/c Dr. $$900$$
To Purchases A/c $$900$$

D
Suspense A/c Dr. $$900$$
To Purchases A/c $$900$$

Solution

This is an error occurred while posting/transferring of balance known as error of casting. When there is error only in one part of the transaction i.e the error is in posting the balance of purchase book and not the creditor/cash account. The entry will be:-
Suspense A/c ...........Dr 900
To Purchases A/c 900.
Question 4
1 / -0

An entry for the goods sold to Madhav for Rs$$1,020$$ was posted to his accountants as Rs$$1,200$$. If rectification is done before preparation of trial balance then which of the following is correct?

A
Suspense A/c Dr $$180$$
To Madhav A/c $$180$$

B
Profit & Loss Adj.A/c Dr $$180$$
To Madhav A/c $$180$$

C
Credit Madhav with Rs$$180$$ saying "By Excess debit for sales Rs$$180$$".

D
Debit Madhav with Rs$$180$$ saying "To Excess debit for sales Rs$$180$$".

Solution

There is an excess debit of Rs.180 to Madhav's a/c due to wrong posting of amount as Rs.1200 instead of Rs.1020. This is an error of commission.

A rectification entry has to be passed as:
Credit Madhav A/c with Rs.180 mentioning "excess debit for sale Rs.180".
Question 5
1 / -0

The balances of all assets accounts, expenses accounts, losses, drawing are placed in the __________ of the trial balance.

A
credit column

B
debit column

C
ledger folio

D
none of the above

Solution

There are golden rule of accounting for recording the transactions based on the type of account i.e personal a/c, real a/c and nominal a/c.

Based on such rules of accounting, assets account, expenses account, losses and drawings are always have a debit balance. Hence while preparing the trial balance, all such accounts are placed in the debit column of the trial balance.
Question 6
1 / -0

The balances of all liabilities accounts, income accounts, profits, capital are placed in the _________ of the trial balance.

A
credit column

B
debit column

C
ledger folio

D
none of the above

Solution

There are golden rule of accounting for recording the transactions based on the type of account i.e personal a/c, real a/c and nominal a/c.

Based on such rules of accounting, liabilities account, income account, profits and capital are always have a credit balance. Hence while preparing the trial balance, all such accounts are placed in the credit column of the trial balance.
Question 7
1 / -0

A sale of Rs$$13,600$$ was recorded in the sales journal as Rs$$3,600$$ and posted to Govind, the customer as Rs$$6,300$$. Identify the amount of the trial balance difference which will be placed in a suspense account.

A
Dr.$$12,700$$

B
Cr.$$2,700$$

C
Dr.$$2,700$$

D
Cr.$$12,700$$

Solution

Credit side (sales journal) is an amount of RS-3,600 whereas Debit side (Govind A/c) shows a balance of RS-6,300. Hence, the credit side is less by RS-2,700 (6,300 - 3,600).
Question 8
1 / -0

Credit side of the trial balance was Rs$$11,200$$ lower than the debit side. The difference was placed in suspense. The correction of which of the following errors will reduce the suspense account balance?

A
Stationery acquired on credit terms for $$Rs340$$ has been recorded in the purchases journal.

B
A cash sale of Rs$$3,400$$ has been posted as Rs$$4,300$$

C
A credit purchase of Rs$$2,150$$ has not been posted to the customer.

D
A credit Note for Rs$$900$$ from a supplier has not been entered in return outwards day book.

Solution

A Credit purchase of RS-2,150 which has not been posted to the customer account will increase the credit balance thereby reducing the balance of suspense account of RS-11,200.
Question 9
1 / -0

Drawings of goods costing $$300$$ were not recorded in the books of account. If this error located after preparation of trial then which of the following rectification entry is correct?

A
Purchases A/c Dr $$300$$
To Drawings A/c $$300$$

B
Drawings A/c Dr $$300$$
To Suspense A/c $$300$$

C
Profit & Loss Adj. A/c Dr $$300$$
To Purchases A/c $$300$$

D
Drawings A/c Dr $$300$$
To Purchases A/c $$300$$

Solution

Goods used for personal purposes has to be recorded as drawings. This is a double sided error and will not affect the trial balance. If this error located after preparation of trial balance, the following rectification will be passed:

Drawings A/c Dr. 300
To Purchases A/c 300
Question 10
1 / -0

A few errors committed in Amrut's books of account are given below. State which errors would affect the trial balance.
(1) Sales of Rs$$950$$ to Ram completely omitted from books of account.
(2) Purchases of Rs$$720$$ from Shyam entered in the purchases journal as Rs$$700$$.
(3) Purchases Journal is overcast by Rs$$1,000$$
(4) Sales returns journal is under cast by Rs$$200$$.
(5) Amount paid to Agarwal wrongly posted to the debit to Mittal's account.
(6) Bank overdraft shown under debit column in the Trial Balance.
(7) Sales of Rs$$500$$ to Sadiq entered in sales journal as sales to Mushtaq.
(8) Wages paid for installation of machinery debited to wages account.

Select the correct answer from the options given below.

A
(1), (3) and (7)

B
(3), (4) and (6)

C
(3), (4), (5)and (8)

D
(3), (4), (6)and (8)

Solution

The errors which will affect the trial balance are 3rd, 4th and 6th errors.
3) Purchase journal is overcast by RS-1,000. This will affect the trial balance as only the debit side of the transaction has an error and the other side is correct thereby affecting the trial balance.
4) Sales return journal is undercast by RS-200. This will affect the trial balance as only the debit side of the transaction has an error and the other side is correct thereby affecting the trial balance.
6) Bank overdraft shown in the debit column in the trial balance. Bank overdraft has a credit balance, and is debited, so both the debit and credit are affected thereby affecting the trial balance.

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Re-Attempt Weekly Quiz Competition

Trial Balance and Rectification of Errors Test 18

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Trial Balance and Rectification of Errors Test 18

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SHARING IS CARING

Question 1

The trial balance is prepared after preparing the profit and loss account.

The trial balance shows only balances of assets and liabilities

The trial balance shows only nominal account balances.

The trial balance has no statutory importance from the point of view of law.

Solution

Question 2

Recording in the purchases journal an invoice for acquiring a non current asset for Rs$$60,000$$.

Adding up the returns inwards journal as Rs$$11,400$$ instead of Rs$$12,600$$.

Recording a sales invoice for Rs 5,600$$ as Rs $$6,500$$ in the sales journal.

Failing to record a purchase invoice for Rs $$54,000$$ in the purchases journal.

Solution

Question 3

Purchases A/c Dr. $$900$$ To Profit & Loss Adj. A/c $$900$$

Purchases A/c Dr. $$900$$ To Suspense A/c $$900$$

Profit & Loss Adj. A/c Dr. $$900$$ To Purchases A/c $$900$$

Suspense A/c Dr. $$900$$ To Purchases A/c $$900$$

Solution

Question 4

Suspense A/c Dr $$180$$To Madhav A/c $$180$$

Profit & Loss Adj.A/c Dr $$180$$To Madhav A/c $$180$$

Credit Madhav with Rs$$180$$ saying "By Excess debit for sales Rs$$180$$".

Debit Madhav with Rs$$180$$ saying "To Excess debit for sales Rs$$180$$".

Solution

Question 5

credit column

debit column

ledger folio

none of the above

Solution

Question 6

credit column

debit column

ledger folio

none of the above

Solution

Question 7

Dr.$$12,700$$

Cr.$$2,700$$

Dr.$$2,700$$

Cr.$$12,700$$

Solution

Question 8

Stationery acquired on credit terms for $$Rs340$$ has been recorded in the purchases journal.

A cash sale of Rs$$3,400$$ has been posted as Rs$$4,300$$

A credit purchase of Rs$$2,150$$ has not been posted to the customer.

A credit Note for Rs$$900$$ from a supplier has not been entered in return outwards day book.

Solution

Question 9

Purchases A/c Dr $$300$$ To Drawings A/c $$300$$

Drawings A/c Dr $$300$$ To Suspense A/c $$300$$

Profit & Loss Adj. A/c Dr $$300$$ To Purchases A/c $$300$$

Drawings A/c Dr $$300$$ To Purchases A/c $$300$$

Solution

Question 10

(1), (3) and (7)

(3), (4) and (6)

(3), (4), (5)and (8)

(3), (4), (6)and (8)

Solution

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Purchases A/c Dr. $$900$$
To Profit & Loss Adj. A/c $$900$$

Purchases A/c Dr. $$900$$
To Suspense A/c $$900$$

Profit & Loss Adj. A/c Dr. $$900$$
To Purchases A/c $$900$$

Suspense A/c Dr. $$900$$
To Purchases A/c $$900$$

Suspense A/c Dr $$180$$
To Madhav A/c $$180$$

Profit & Loss Adj.A/c Dr $$180$$
To Madhav A/c $$180$$

Purchases A/c Dr $$300$$
To Drawings A/c $$300$$

Drawings A/c Dr $$300$$
To Suspense A/c $$300$$

Profit & Loss Adj. A/c Dr $$300$$
To Purchases A/c $$300$$

Drawings A/c Dr $$300$$
To Purchases A/c $$300$$