Trial Balance and Rectification of Errors Test 35

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Trial Balance and Rectification of Errors Test 35

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Question 1
1 / -0

The main purpose of preparing a trial balance is _________.

A
To prepare a summary of all the balance

B
To compare the debit balance with credit balance

C
To locate all types of frauds

D
To check the arithmetic accuracy of the ledger accounts

Solution

Trial Balance is prepared by listing of all ledger balances. The statement in which the debit and credit balances are noted down and finally totaled up to ascertain if they are equal, is called Trial Balance.

The primary object of preparing the trial balance:
1) It is to check the accuracy of posting. If the trial balance agrees it proves that books are arithmetically accurate and both the aspects of all the transactions are correctly recorded.
2) It brings together the balances of all accounts at one place.
Question 2
1 / -0

Suspense Account is shown in the __________.

A
Trading and Profit and Loss Account

B
Income and Expenditure Account

C
Balance Sheet

D
None of the Above

Solution

There are certain transactions which requires more clarity are temporarily parked in an account which is named as suspense account. If the entries are not clarified before finalizing the books of account, this will be shown in the balance sheet as asset or liability depending upon the nature of balance.
Question 3
1 / -0

Suresh and Sons, a dealer in machinery, debit machinery account for purchasing machinery on credit. It is an error of ____________.

A
Omission

B
Commission

C
Principle

D
Compensation

Solution

Error of principle are those where a fundamental principle of accounting is not followed while doing the accounting. Like debiting the revenue expenditure as capital expenditure.
In the given case, Suresh & Sons is dealing in the machinery trading, hence amount to be debited to purchase account not to the machinery account.
Question 4
1 / -0

Which of the following is an error of commission?

A
A sales of $$Rs.560$$ omitted to be recorded.

B
A purchase of $$Rs.840$$ was wrongly posted.

C
Treating charges as addition to asset.

D
One error committed is compensated by another error.

Solution

Error of commission is that where the amount is posted wrongly. These kind of errors will affect the trial balance. If an amount of purchases of $$Rs.840$$ is wrongly posted then, it is an error of commission.
Question 5
1 / -0

Failure to record completely credit purchases of goods in purchase Journal, it is an error of _____________.

A
commission

B
omission

C
principle

D
recording

Solution

When a complete transaction is missed out in recording in books of account, its an error of omission. In such situation, there will be no effect on trial balance and trial balance will be tallied.
Failure to record the purchase entry completely is an error of omission.
Question 6
1 / -0

It was discovered that purchase of typewriter for Rs. 450 was recorded by a debit of Rs. 450 to office equipment account and a debit of Rs.450 to creditors account.The credit column of the trial balance totals Rs.48,100.What should be the total of the Debit column before the correction of this error?

A
Rs. 41,100

B
Rs. 48,500

C
Rs. 47,650

D
Rs. 49,000

Solution

The Balance on the Debit side of the trial balance before making the stated correction would be
Balance on credit Side of Trial Balance 48100
Add: Debit of Office Equipment 450
Add: Debit of Creditors a/c 450
49000
Question 7
1 / -0

Suspense Account is used to rectify those errors which have been located ______________.

A
Before preparation of trial balance

B
After preparation of trial balance

C
Before or after preparation of trial balance

D
After preparation of final accounts

Solution

There are certain transactions which requires more clarifications. Till the final clarification, all such items are parked in a temporary account i.e. suspense account.
Once the errors are located, rectification entries are passed through suspense account to make the suspense account zero.
All such errors are errors after preparation of trial balance and hence are rectified by using suspense account.
Question 8
1 / -0

Posting of wrong amount in the ledger ___________________.

A
Causes the trial balance to be out of balance.

B
Does not cause the trial balance to be out balance.

C
Cause the ledger account to be out of balance.

D
None of the above.

Solution

The posting of wrong amount in the ledger would cause the trial balance to be out of balance.
For Eg : -
Cash received from Debtor is posted in cash account for $$Rs.5100$$ but, in debtors account the amount of receipt is incorrectly posted as $$Rs.5400$$ . Now this would lead to a scenario where the total of the trial balance would be reflecting $$Rs.5400$$ on the credit side but only $$Rs. 5100$$ on the debit side.
Question 9
1 / -0

An item of Rs. 38 has been debited to a personal account as Rs.83, it is an error of ______________.

A
principle

B
omission

C
recording

D
commission

Solution

Error of commission is that where an amount is wrongly posted in the ledger. These error will effect the trial balance and trial balance will be out of order. For example Rs.38 is debited as Rs.83. In this case trial balance will be out of order by Rs.45.
Question 10
1 / -0

Which are the errors which does not affect the trial balance?

A
Wrong recording in the original books.

B
Error in balancing the account.

C
Omission of Casting.

D
Forgetting to write cash book balance in the trial balance.

Solution

If a transaction is not recorded correctly in the original books then it will not affect trial balance as it is two sided error.

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Trial Balance and Rectification of Errors Test 35

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Trial Balance and Rectification of Errors Test 35

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Question 1

To prepare a summary of all the balance

To compare the debit balance with credit balance

To locate all types of frauds

To check the arithmetic accuracy of the ledger accounts

Solution

Question 2

Trading and Profit and Loss Account

Income and Expenditure Account

Balance Sheet

None of the Above

Solution

Question 3

Omission

Commission

Principle

Compensation

Solution

Question 4

A sales of $$Rs.560$$ omitted to be recorded.

A purchase of $$Rs.840$$ was wrongly posted.

Treating charges as addition to asset.

One error committed is compensated by another error.

Solution

Question 5

commission

omission

principle

recording

Solution

Question 6

Rs. 41,100

Rs. 48,500

Rs. 47,650

Rs. 49,000

Solution

Question 7

Before preparation of trial balance

After preparation of trial balance

Before or after preparation of trial balance

After preparation of final accounts

Solution

Question 8

Causes the trial balance to be out of balance.

Does not cause the trial balance to be out balance.

Cause the ledger account to be out of balance.

None of the above.

Solution

Question 9

principle

omission

recording

commission

Solution

Question 10

Wrong recording in the original books.

Error in balancing the account.

Omission of Casting.

Forgetting to write cash book balance in the trial balance.

Solution

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