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Trial Balance and Rectification of Errors Test 33

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Trial Balance and Rectification of Errors Test 33
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  • Question 1
    1 / -0
    An invoice of Rs. 560 is entered in the sales book as Rs. 650. The total of the debit side of the trial balance is Rs. 21,440. Assuming no other error what is the total of the credit side of the trial balance?
    Solution
    There are various kinds of error which may occur during the accounting. These are classified as error of omission, error of commission, error of principle and compensating error.
    If an amount is written wrongly, its an error of commission. Its a clerical error.
    Customer account is debited by Rs.650 instead of Rs.560, hence there will be an excess debit of Rs.90. Therefore the total of credit side of the trial balance should be Rs.21350 (Rs.21440-Rs.90)
  • Question 2
    1 / -0
    Which of the following errors will not cause the trial balance to be out of order?
    Solution
    A transaction of rs.460 recorded as Rs.640 in sales day book. This will not impact trial balance as sales is over cast by Rs.180 and the customer account is also over cast by Rs.180. 
    Therefore, this error will not cause mismatch in trial balance.
  • Question 3
    1 / -0
    Trial balance is a proof that _____________.
    Solution
    Financial accounting is based on double entry system of accounting. For every debit there will be a credit and vice versa. Trial balance shows the total of debit and total of credit. Its a proof that all transactions are recorded both the sides.
  • Question 4
    1 / -0
    Cash sales to Shyam of Rs. 500 not recorded in the books would affect __________.
    Solution
    When sales to Shyam of Rs. 500 is made for cash, entry to be passed is:
    Cash Account Dr.
         To Sales account 
    This leads to error of omission i.e. when any transaction is not recorded in  the books of original entry . Such errors do not affect trial balance.
    Therefore, when such cash sale transaction is not recorded in the books, it would affect cash and sales account.
  • Question 5
    1 / -0
    Which of the following is an error of commission?
    Solution
    There are various kinds of error which may occur during the accounting. These are classified as error of omission, error of commission, error of principle and compensating error.
    Error of commission is committed due to wrong posting, wrong casting or wrong recording of amounts in the books. Accordingly, recording purchases on the wrong side of the account is an error of commission.
  • Question 6
    1 / -0
    Which one of the following error is an error of principle?
    Solution
    Accounting entries are recorded as per the generally accepted accounting principles. An error of principle may occur due to incorrect classification of expenditure or receipt between capital and revenue. This is very important because it will have an impact on financial statement. Debiting repairs account instead of furniture account is an example of error of principle (capital expenditure is wrongly recorded as revenue expenditure).
  • Question 7
    1 / -0
    An entry of Rs. 500 was wrongly posted to wages account instead of machinery account, as wages are to be capitalised. It is an error of ________.
    Solution
    Error of principle is defined as an accounting error violating the basic principles of accounting. Its a procedural error where amount are correctly recorded but basic principles are avoided. Recording of wages as expenses instead of posting it to machinery account will therefore be termed as error of principle.
  • Question 8
    1 / -0
    Errors of principle arises when __________.
    Solution
    Option A is the correct answer.
    Accounting entries are recorded as per the generally accepted accounting principles. If any of these principle are violated or ignored, errors resulting from such violation are known as errors of principle.
    An error of principle may occur due to incorrect classification of expenditure or receipt between capital and revenue.
    This is very important because it will have an impact on financial statements. 
  • Question 9
    1 / -0
    Error of commission does not permit ____________.
    Solution
    Error of commission is that error in which amounts are incorrectly recorded.  For example, a credit sale to Neha for $$Rs.510$$ is recorded in Neha's account as $$Rs.150$$. This may lead to disagreement of trial balance.
  • Question 10
    1 / -0
    Which of the following errors will not cause the trial balance to be out of balance?
    Solution
    1) Instead of sales credited, charges account is credited. Its an error of commission. This will not effect trial balance.
    2) Purchase return book is a subsidiary book, hence this will not give any effect in trial balance.
    3) Sales book is a subsidiary book which does not effect the trial balance. 
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