Trial Balance and Rectification of Errors Test 32

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Trial Balance and Rectification of Errors Test 32

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Question 1
1 / -0

When the total of trial balance is not reconciled, the account opened at this juncture is:

A
Trading account

B
Suspense account

C
Profit & loss account

D
None of these

Solution

The Trial Balance Shows the list of ledger accounts. When the debit Column of the Trial balance is equal to Credit Column then it proves the arithmetic accuracy of the Ledger accounts.
But the debit column is not equal to Credit Column then the Suspense account is opened.
Question 2
1 / -0

Which of the statements are true.

A
Trial Balance is prepared after preparing the P& L A/c

B
Trial Balance is prepared after preparing the Balance Sheet

C
Trial Balance is prepared before preparing the Balance Sheet

D
None of these

Solution

A trial balance is prepared to record all the balances of debit and credit of the ledger. A balance sheet is prepared at the end of the year, but a trial balance can be prepared at the end of a month, quarter, etc.
Question 3
1 / -0

A purchase of Rs. 10,000 has been wrongly posted to the credit of Purchase Account but had been correctly entered in the Supplier's Account. This is an error of ______.

A
Omission

B
Commission

C
Principle

D
Compensating

Solution

A purchase of Rs-10,000 is wrongly posted to credit of purchase account but is correctly entered in the suppliers account where as the correct entry should have been :-
Purchase account...... Dr
To supplier's account.
This is an error of commission. This error includes recording in wrong account, recording wrong amount etc.
Question 4
1 / -0

Closing stock of previous year is overvalued by Rs. $$50,000$$. Due to this.

A
Previous year's profit is overstated and current year's profit is understated

B
Previous year's profit is understated and current year's profit is overstated

C
Previous years profit is overstated and current year's profit is overstated

D
Previous year's profits is understated and current year's profit is understated

Solution

Closing stock of the previous year is credited to the trading account of previous year which increases the credit total and the gross profit of the year. Closing stock of previous year is the opening stock of current year. Opening stock of current year is debited to the trading account of current year, if the opening stock is overvalued the current year profit will decrease.
For example, the actual value of closing stock of previous year is Rs. 20000 overvalued at Rs 70000, the value of credit side total will increase and the gross profit will increase. For the current year previous year closing stock is the opening stock and is debited in the trading account. The debit side total is deducted from the credit side total to calculate the gross profit, if the debit side total is more the gross profit will fall.
Question 5
1 / -0

Trial balance is prepared from ____________.

A
Journal

B
Ledger

C
Cash book

D
None of these

Solution

Trial balance is prepared from ledger balances.
Question 6
1 / -0

If no entry is made for goods returned by Anjani worth Rs.4,000, the rectifying entry will be to Dr _________A/c 4,000 and credit _______ A/c 4,000.

A
Anjani; Sales

B
Sales Return; Anjani

C
Suspense: Anjani

D
Anjani; Sales Return

Solution

Goods are being returned so sales return will be debited and Anjali is a debtor which will be reduced therefore it will be credited.
Question 7
1 / -0

An item of Rs 84 has been wrongly entered as Rs 48. This is an error of

A
Omission

B
Commission

C
Principle

D
No consequence

Solution

In this case, An item of Rs. 84 has been wrongly entered as Rs. 48.
When a transaction is posted wrongly then it is known as error of commission.
There are mainly 2 types of error
1. Error of Principle
2. Clarical Error
Question 8
1 / -0

Which of the following is true about a trial balance?

A
It lists down the balances of accounts

B
It lists down the balances of a balance sheet

C
It is a kind of financial statement

D
It is not a part of accounting cycle

Solution

A trial balance is a list of all the general ledger accounts (both revenue and capital) contained in the ledger of a business.
Question 9
1 / -0

Purchase of office furniture worth Rs. 20,000 has been debited to the General Expenses account. It is

A
A clerical error

B
An error of principle

C
An error of omission

D
An error of commission

Solution

Error of principle is when the basic principle of accounting is not followed. In this there is no distinction between capital and revenue items. Such errors do not affect the agreement of the trial balance because the accounting treatment is correct only the principle of accounting is not followed.
In the case, furniture is an asset and expenditure on it is classified as capital expenditure and is transferred to the balance sheet. General expense is revenue expenditure and is charged to the profit and loss account. Trial balance will not be affected in this error.
Question 10
1 / -0

Error of Commission will not permit

A
Correct Total of the Balance Sheet

B
Correct Total of the Trial Balance

C
The Trial Balance to agree

D
None of the above

Solution

The error of commission means the wrong posting of the balance or wrong total or entering the wrong amount in the correct subsidiary book or posting the correct amount in the wrong subsidiary book etc.
These kinds of errors may affect the balancing of the Trial Balance.

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Trial Balance and Rectification of Errors Test 32

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Trial Balance and Rectification of Errors Test 32

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Question 1

Trading account

Suspense account

Profit & loss account

None of these

Solution

Question 2

Trial Balance is prepared after preparing the P& L A/c

Trial Balance is prepared after preparing the Balance Sheet

Trial Balance is prepared before preparing the Balance Sheet

None of these

Solution

Question 3

Omission

Commission

Principle

Compensating

Solution

Question 4

Previous year's profit is overstated and current year's profit is understated

Previous year's profit is understated and current year's profit is overstated

Previous years profit is overstated and current year's profit is overstated

Previous year's profits is understated and current year's profit is understated

Solution

Question 5

Journal

Ledger

Cash book

None of these

Solution

Question 6

Anjani; Sales

Sales Return; Anjani

Suspense: Anjani

Anjani; Sales Return

Solution

Question 7

Omission

Commission

Principle

No consequence

Solution

Question 8

It lists down the balances of accounts

It lists down the balances of a balance sheet

It is a kind of financial statement

It is not a part of accounting cycle

Solution

Question 9

A clerical error

An error of principle

An error of omission

An error of commission

Solution

Question 10

Correct Total of the Balance Sheet

Correct Total of the Trial Balance

The Trial Balance to agree

None of the above

Solution

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