Trial Balance and Rectification of Errors Test 3

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Trial Balance and Rectification of Errors Test 3

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Question 1
1 / -0

Which of the following error is revealed by trial balance?

A
Wrong amount entered in the book of original entry

B
Wrong amount entered in a ledger account

C
Complete omission of an entry from the book of original entry

D
All of the above

Solution

Option B is the correct answer.
An amount wrongly posted in ledger will make trial balance disagree. Accounting is based on double entry system of accounting where for every debit there will be a credit. Due to wrong amount of posting, debit and credit will not match and there will be a difference in trial balance.
Question 2
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State which of the following errors will not be revealed by the trial balance?

A
Errors of complete omission.

B
Errors of carrying forward.

C
Wrong totalling of the purchases book.

D
Error of partial omission.

Solution

Error of complete omission would not be revealed from trial balance as its a complete omission. When complete entry is missed, this will be a complete omission, hence trial balance will not have any mismatch.
Question 3
1 / -0

Which of the following errors will cause the trial balance to be out of balance?

A
The total of the Purchase book is Rs. 1000 short.

B
Goods received back from Mahesh, Rs. 250 have not been entered in the Returns Inwards book.

C
Office furniture purchased from Ravi and Co. Rs. 950 has been entered in the Purchase book.

D
A purchase of Rs. 251 from Gopal and Co. has not been entered in the Purchase book.

Solution

All credit purchases are recorded in purchase day book. At the end of a particular period, total of purchase day book will be transferred to purchase account in ledger. All suppliers accounts are also posted in to individual ledger.
Under casting of purchase book by Rs.1000 will affect the purchase account and will not match the balance of the corresponding suppliers account. Such mismatch will therefore, cause trial balance to be out of balance.
Question 4
1 / -0

Agreement of the trial balance may not indicate that _________________.

A
No error remains undetected

B
Double entry has been completed

C
Arithmetic accuracy is reasonably proved

D
All ledger accounts have been correctly posted

Solution

D is correct.
Though agreement of trial balance gives an outcome that there is no clerical error but it does not ensure that all ledger are correctly posted.
For example, purchase of type writer recorded in purchase book instead of assets. In such situation, trial balance will be tallied but there is an error of principle.
Question 5
1 / -0

An item of $$Rs.72$$ has been debited to a personal account as $$Rs.27$$, is an error of ___________.

A
Commission

B
Omission

C
Principle

D
None of the Above

Solution

Error of commission is that error in which amounts are incorrectly recorded. This may lead to a disagreement in the trial balance.
Question 6
1 / -0

Which of the following errors is disclosed by trial balance?

A
Error of principle

B
Wrong amount posted in ledger account

C
Non-recording of a transaction in the book of original entry

D
None of the above

Solution

Option B is correct answer.
There are various kinds of error which may occur during the accounting. These are classified as:
Error of omission- When a complete transaction is omitted in recording. This will not affect trial balance.
Error of commission-When a wrong amount is posted in ledger. Such kind of error affect the trial balance.
Error of principle- If any of the accounting principle is not followed while recording the transaction. Like purchase of asset is recorded in purchase account. Trial balance will not have any disagreement due to such kind of error.
Compensating error- If one error is compensated by another error. This will also not affect the trial balance.

A wrong amount posted in ledger will affect the trial balance. In such situation trial balance will not match.
Question 7
1 / -0

When an account that normally has debit balance shows a credit balance, or vice-versa, it indicates ______________.

A
an unusual transaction must have occurred

B
an error in recording must have been made

C
an error in recording may have been made

D
an entry must have been omitted

Solution

Trial Balance is prepared to check and confirm whether posting of all transactions is done in the ledger. If trial balance agrees, it proves that books of account are arithmetically correct. If the total of debit and credit is not matching, it means there are some clerical error.
If an account is having a debit balance actually has credit balance or vice-versa, it indicates that an there is an error in recording.
Question 8
1 / -0

Most widely used method in preparation of trial balance is __________.

A
Balances method

B
Totals method

C
Totals-cum-balances method

D
All of the above

Solution

Trial balance can be prepared in three ways:

1) Total cum balance method- In this method, total and balances both are captured in tabular form.
2) Total Method- In this method, total of debit and credit are incorporated in the tabular form.
3) Balance method- In this method, only balances are taken in the trial balance. This method is most widely used for preparation of trial balance.
Question 9
1 / -0

'Good sent on approval basis' have been recorded as 'Credit sales'. This is an example of

A
Error of principle

B
Error of commission

C
Error of omission

D
Error of duplication

Solution

'Good sent on approval basis' has been recorded as 'Credit sales'. This is an example of the Error of principle.
If the accounting entries are not recorded as per the generally accepted accounting principles then it is known as the Error of Principle.
Question 10
1 / -0

Past adjustments can be rectified with the help of _____________.

A
profit and loss adjustment account

B
directly by making changes in capital accounts

C
Both A and B

D
None

Solution

Few transactions of omission or errors come in light after finalisation of final accounts. Any omission or commission error also have retrospective effect. All these acts of omission and commission needs adjustment for correction of there impacts and instead of altering old accounts necessary adjustments are made either in profit and loss adjustment account or directly through capital accounts.

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Trial Balance and Rectification of Errors Test 3

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Question 1

Wrong amount entered in the book of original entry

Wrong amount entered in a ledger account

Complete omission of an entry from the book of original entry

All of the above

Solution

Question 2

Errors of complete omission.

Errors of carrying forward.

Wrong totalling of the purchases book.

Error of partial omission.

Solution

Question 3

The total of the Purchase book is Rs. 1000 short.

Goods received back from Mahesh, Rs. 250 have not been entered in the Returns Inwards book.

Office furniture purchased from Ravi and Co. Rs. 950 has been entered in the Purchase book.

A purchase of Rs. 251 from Gopal and Co. has not been entered in the Purchase book.

Solution

Question 4

No error remains undetected

Double entry has been completed

Arithmetic accuracy is reasonably proved

All ledger accounts have been correctly posted

Solution

Question 5

Commission

Omission

Principle

None of the Above

Solution

Question 6

Error of principle

Wrong amount posted in ledger account

Non-recording of a transaction in the book of original entry

None of the above

Solution

Question 7

an unusual transaction must have occurred

an error in recording must have been made

an error in recording may have been made

an entry must have been omitted

Solution

Question 8

Balances method

Totals method

Totals-cum-balances method

All of the above

Solution

Question 9

Error of principle

Error of commission

Error of omission

Error of duplication

Solution

Question 10

profit and loss adjustment account

directly by making changes in capital accounts

Both A and B

None

Solution

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