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Trial Balance and Rectification of Errors Test 29

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Trial Balance and Rectification of Errors Test 29
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  • Question 1
    1 / -0
    Purchase of office furniture for $$Rs.6000$$ has been debited to General Expenses.Account. Its is 
    Solution
    When the fundamental principle of accounting is violated while preparing the accounts, this is known as error of principle. These errors are made when there’s no proper distinction between capital and revenue items i.e., capital expenditure being treated as revenue expenditure and vice versa. 
    Amount spent on acquiring fixed assets such as office furniture is known as capital expenditure and this is debited to the furniture account as it is a fixed asset and it is used for a number of years and so its expenses is distributed. 
    General expenses are those the effect of which is observed in the current year only and it is deducted from the profit of the year.
  • Question 2
    1 / -0
    The Total of Sales Book was not posted to the ledger at all. This error-
    Solution
    When the total sales book is not posted to the ledger at all, this is an error of partial error. Trial balance is prepared from the balances of the ledger accounts. This error will affect the trial balance because sales account ledger always has a credit balance and a missing balance will lead to unstable balance. Here the debit balance of the trial balance will exceed the credit balance because of the missing credit balance of sales account.
    This will affect the profit of the year because sales account balance is transferred to the credit of trading account which affects the profit. Missing sales account balance decreases the profit of the year.
  • Question 3
    1 / -0
    Sales to Meena Rs.143 was posted to Meenu. This error: 
    Solution
    Sales to Meena posted to Meenu is an error of posting. The actual entry for the transaction is-
    Meena A/c        Dr 143
         To Sales A/c           143
    The incorrect entry passed here is-
    Meenu A/c      Dr 143 
           To Sales A.c       143
    Here the amount has been posted correctly and sales account is also correct. There is an error only in the name of the account and this does not affects the trial balance because amount is the same.
  • Question 4
    1 / -0
    A sale of office furniture credited to Sales Account :
    Solution
    When furniture is sold it is credited to the furniture account as it not the main purpose of the business so it cannot be categorised as normal sales. Sale of furniture is a capital income. When sale of furniture is credited to sales account, this is known as error of principle. Error of principle is when basic principle of accounting is not followed, here no distinction is made between capital and revenue items. 
    This error will not affect the trial balance because though the transaction is recorded in the wrong account, but the accounting treatment is correct i.e., instead of furniture account sales account is credited. The net effect of this error is not observed.
    This will affect the profit because capital income and capital expense are not included in the profit and loss account. Thus when such income is treated as revenue incomes and added to the profit and loss account, the profit will be affected.
  • Question 5
    1 / -0
    Goods costing Rs.10,000 taken by the proprietor for personal use were not recorded. The error __________ .
    Solution
    When goods taken by proprietor for personal use is not recorded, this is error of omission, i.e., both the debit and credit aspect of the transaction is not recorded. Thus it does not affect the trial balance as any part of the transaction is not recorded. 
    It will affect the net profit because gross profit will be less because of increased value of purchases account balance.
  • Question 6
    1 / -0
    Which of the following errors will not affect the Trial Balance?
    Solution
    Posting the correct amount in the wrong account on the correct side is the error of posting. This error does not affect the agreement of the trial balance because even though the posting is made to the wrong account but the amount entered is correct and the accounting treatment is same as it would be in the correct account. 
    For example, cash sales of 10000, is debited to the debtor's account with 10000 instead of a cash account. The credit entry for sales account remains the same. In this case the debtors account balance will increase while the cash account balance will be unchanged. The trial balance thus tallies.
  • Question 7
    1 / -0
    Credit purchase of goods worth Rs 10000 was recorded as credit sale to Mr. X , the mistake was discovered after 2 months. Rectifying entry is to be made in ?
    Solution
    The rectifying entry will be made in Journal proper to rectify the error of posting in wrong account.
  • Question 8
    1 / -0
    A purchase of Rs.10,000 has been wrongly posted to the credit of sales  Accountant had been correctly entered in the Supplier Account. This error _____________.
  • Question 9
    1 / -0
    Good returned by Y for Rs.10,000 passed through the purchases Book. The error will result in _________________.
  • Question 10
    1 / -0
    The total of a folio in the Sales Book Rs.1,000 was carried forward as Rs 100. This error
    Solution
    When the total of sales book is carried forward with wrong amount, this is error of posting. This will affect the trial balance because if incorrect amount is transferred to the trial balance the trial balance will not agree. In this case the trial balance will show more debit balance as sales account is undercast, value of debit side of trial balance exceeds the credit side.
    This will affect the profit of the year because balance of sales account is included in the trading account to calculate gross profit, any change in the sales account balance will affect the gross profit. This gross profit is transferred to the profit and loss account to find the net profit. 
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