Trial Balance and Rectification of Errors Test 24

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Trial Balance and Rectification of Errors Test 24

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Question 1
1 / -0

Which of the following is/are method for preparation of trail balance ?

A
Balances Method

B
Totals Method

C
Both (A) & (B)

D
None of the above

Solution

There are 3 methods of preparation of trial balance :-
1) Totals method - In this method all the totals of debit and credit columns of the ledger accounts are transferred are transferred to the trial balance and the closing balances are of no concern.
2) Balances method - Here only the closing balances of the ledger accounts are transferred of the relevant debit and credit side.
3) Totals-cum-balances Method - This method is a combination of totals method and balances method.
Question 2
1 / -0

After the preparation of ledgers, the next step is the preparation of ______________.

A
Trading accounts

B
Trial balance

C
Profit and loss account

D
None of the above

Solution

After the preparation of ledgers, the next step is the preparation of trial balance. After preparation of ledger accounts, all the balances of the ledger accounts are transferred to trial balance and it should tally. The trial balance checks the arithmetical accuracy of the books of accounts.
Question 3
1 / -0

Pending the location of errors in the books of accounts that affect the agreement of the Trial Balance, the difference disclosed is normally posted to ______________

A
Adjustment Account.

B
Holding Account.

C
Control Account.

D
Suspense Account.

Solution

Ideally, all the accounting errors have to be rectified before finalization of accounts. If the errors are not identified and pending for rectification, the difference in trial balance have to be transferred in a temporary account termed as "suspense a/c.
All rectification entries are do be done through suspense account.
Question 4
1 / -0

If there is a non agreement of trial balance the possible reasons could be__________________.

A
Complete omission of the posting

B
Due to transposition of the posting

C
There has been a wrong posting either on debit side or credit side

D
All of the above

Solution

If there is a non-agreement of trial balance the possible reasons could be the complete omission of posting, due to transposition of the posting or there has been a wrong posting either on debit or credit side.
Question 5
1 / -0

Which of the following statements is correct in relation to a trial balance?

A
It shows the financial position of a business

B
All the balances in the trial balance will be summarized on the business balance sheet

C
It is a list of balances and forms the starting point for the preparation of the business accounts

D
It is part of the published accounts of a business

Solution

Balance sheet and Income statement shows the financial position of a business.
Trial balance is a list of balances , from which financial statements are prepared i.e. balances will be summarized on the business balance sheet.
The preparation of business accounts starts with journal entries.
And trial balance cannot be published as accounts of business.
Question 6
1 / -0

________ arises due to some positive act of commission on the part of the person responsible for the maintenance of the books of account.

A
Errors of principle

B
Complete omissions

C
Compensating errors

D
Errors of commission

Solution

An error of commission arises due to some positive act of commission on the part of the person responsible for the maintenance of the books of account. An error of commission arises when there is wrong posting, the wrong amount posted in the wrong account, etc.
Question 7
1 / -0

Bank overdraft is shown on the _____side of trial balance.

A
Credit

B
Debit

C
None

D
Both

Solution

Bank overdraft is shown on the credit side of the trial balance. Bank overdraft is a liability for the company as it is to be paid at a future date.
Question 8
1 / -0

An agreement of the trial balance does not prove that _____________.

A
All transactions have been correctly analyzed and recorded in the proper accounts

B
All transactions have been recorded in the books of original entry

C
Both (A) & (B)

D
None of above

Solution

The agreement of trial balance does not prove that all transactions have been correctly analysed and recorded in the proper accounts and all transactions have been recorded in the books of original entry. The books of accounts may tally in case of errors of complete omission or compensating errors.
Question 9
1 / -0

An entry for the goods sold to Madhav for Rs.1,020 was posted to his accounts 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

Posting of sales of Rs.1020 to Madhav a/c is done by Rs.1200. Its a single sided error. Madhav's a/c is excessively debited by Rs.180. To rectify the transaction, credit is given to Madhav by Rs.180 stating "by excess debit for sales Rs.180."
Question 10
1 / -0

Wages paid for installation of machinery debited to wages account. This is _______________.

A
Errors of commission

B
Errors of partial omission

C
Errors of principle

D
Not a error at all

Solution

Wages paid for installation of machinery debited to wages account is an error of principle. An error of principle is an accounting mistake in which an entry is recorded in wrong account, violating the fundamental principles of accounts. Wages paid for installation of machinery should be recorded in machinery account and not wages account.

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Trial Balance and Rectification of Errors Test 24

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Trial Balance and Rectification of Errors Test 24

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Question 1

Balances Method

Totals Method

Both (A) & (B)

None of the above

Solution

Question 2

Trading accounts

Trial balance

Profit and loss account

None of the above

Solution

Question 3

Adjustment Account.

Holding Account.

Control Account.

Suspense Account.

Solution

Question 4

Complete omission of the posting

Due to transposition of the posting

There has been a wrong posting either on debit side or credit side

All of the above

Solution

Question 5

It shows the financial position of a business

All the balances in the trial balance will be summarized on the business balance sheet

It is a list of balances and forms the starting point for the preparation of the business accounts

It is part of the published accounts of a business

Solution

Question 6

Errors of principle

Complete omissions

Compensating errors

Errors of commission

Solution

Question 7

Credit

Debit

None

Both

Solution

Question 8

All transactions have been correctly analyzed and recorded in the proper accounts

All transactions have been recorded in the books of original entry

Both (A) & (B)

None of above

Solution

Question 9

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 10

Errors of commission

Errors of partial omission

Errors of principle

Not a error at all

Solution

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Suspense A/c Dr. 180

To Madhav A/c 180

Profit & Loss Adj. A/c Dr. 180

To Madhav A/c 180