Trial Balance and Rectification of Errors Test 37

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Trial Balance and Rectification of Errors Test 37

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Weekly Quiz Competition

Question 1
1 / -0

Which is the correct statement?

A
Errors of principle do not affect agreement of trial balance.

B
Error of complete omission of any transaction is an error of principle.

C
One sided error does not effect trial balance.

D
Error of casting is an error of principle.

Solution

While doing the accounting, if the basic rule of accounting is not followed, there is an error of principle.
For example, purchase of machinery is debited to purchases account. Its an error of principle as capital expenditure is debited as revenue expenditure. This will affect the profitability of the business. But in such case, there will be no affect on agreement of trial balance.
Question 2
1 / -0

Rectification of errors is necessary to _________.

A
Prepare financial statements

B
Ensure true and fairness of books of account

C
Authenticate and audit the accounts

D
All the above
Solution
Accounting is to be done in such a systematic way so that the financial statement must show a true and fair view of the business. It is necessary to rectify all the errors to ensure that:
The financial statement are prepared
The books of account show true and fair view
The books are arithmetically correct
Question 3
1 / -0

_____________ affect agreement of trial balance.

A
Wrong casting or totalling of the subsidiary books

B
Omission of a transaction in the subsidiary books

C
Writing wrong amount in the subsidiary books

D
Posting a correct amount on correct side but in a wrong account

Solution

Trial Balance will not be tallied if the wrong casting or totaling of the subsidiary books is done.
For example , sales day book totaling is transferred to sales ledger as Rs.4560 instead of Rs.4650. In such case, trial balance will mismatch by the difference of Rs.4560 and Rs.4650 i.e. Rs.90 as the posting to individual ledger is done correctly but the total of subsidiary book is wrongly posted.
Question 4
1 / -0

Which of the following is not an error of principle?

A
Rs. 10,000 paid for erection and commissioning of Plant & Machinery debited to repairs and Maintenance A/c.

B
Rs. 4,000 paid by Shyam, credited to his A/c.

C
Rs.1,000 paid as cartage for office furniture debited to Carriage A/c.

D
Rs.5,000 paid to Gopal as his salary, debited to his A/c.

Solution

While doing the accounting, if the basic rule of accounting is not followed, there is an error of principle.
For example, purchase of machinery is debited to purchases account. Its an error of principle as capital expenditure is debited as revenue expenditure. This will affect the profitability of the business. But in such case, there will be no affect on agreement of trial balance.
Rs.4000 paid by Shyam, credited to his a/c is not an error of principle.
Question 5
1 / -0

XYZ purchased trading goods worth $$Rs.50,000$$. This was capitalized along with Plant and Machinery A/c. This is an error of __________.

A
principle

B
omission

C
commission

D
compensating

Solution

When an accounting transaction is passed by not following the fundamental rule of accounting, its an error of principle.

Purchase of trading goods worth $$Rs.50000$$ has to be debited to purchases account , not to the plant & machinery account. This is an error of principle.
Question 6
1 / -0

Suspense A/c is a __________.

A
Nominal A/c

B
Personal A/c

C
Real A/c

D
All of the above
Question 7
1 / -0

__________affect two or more accounts.

A
Errors of complete omission

B
Errors of principle

C
Errors of posting to wrong account

D
All of the above

Solution

Error of complete omission will affect two or more accounts as the transaction is completely missed out.

Error of principle affects two or more account as instead of one account, another type of account is debited or credited.

Error of posting to wrong account also affect two or more account.
Question 8
1 / -0

Debit side of XYZ's a/c was overcast by Rs.1,000, on the other hand credit side of PQR's account was overcast by Rs. 1,000. This is a case of __________error.

A
principle

B
compensating

C
commission

D
none of the above

Solution

When two or more errors are committed in such a way that the net effect of these errors on the debits and credits of accounts is nil, such errors are called compensating errors. Such errors do not affect the tallying of the trial balance. For example, the debit side of XYZ's A/c was overcast by Rs. 1,000 resulting in the excess debit of Rs. 1,000, on the other hand, credit side of PQR's account, was overcast by Rs. 1,000 resulting in excess credit of Rs. 1,000, which is a case of two errors compensating each other's effect.
Question 9
1 / -0

Sale of office furniture was recorded in sales account. On rectification of this mistake which account will be credited?

A
Suspense a/c

B
Office furniture a/c

C
Sales a/c

D
none of these

Solution

In the given situation:

Correct entry will be:

Bank A/c Dr.
To Office Furniture A/c

Wrong entry passed is:

Bank A/c Dr.
To Sales A/c

Rectification entry will be as under:

Sales A/c Dr.
To Office Furniture A/c
Question 10
1 / -0

Which of these is/are errors of commission?

A
Wrong casting of subsidiary books

B
Errors of carry forward

C
Errors of posting

D
All the three

Solution

Errors of commission are the errors that are committed due to wrong posting of transactions, wrong totaling or balancing of the accounts, wrong casting of the subsidiary books, or wrong recording of amount in the books of original entry, etc. For example: Raj Hans Traders paid Rs. 25,000 to Preetpal Traders (a supplier of goods). This transaction was correctly recorded in the cashbook. But while posting to the ledger, Preetpal's account was debited with Rs. 2,500 only. This constitutes an error of commission. Such an error by definition is of clerical nature and most of the errors of commission affect the trial balance.

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Trial Balance and Rectification of Errors Test 37

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Trial Balance and Rectification of Errors Test 37

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Question 1

Errors of principle do not affect agreement of trial balance.

Error of complete omission of any transaction is an error of principle.

One sided error does not effect trial balance.

Error of casting is an error of principle.

Solution

Question 2

Prepare financial statements

Ensure true and fairness of books of account

Authenticate and audit the accounts

All the above

Solution

Question 3

Wrong casting or totalling of the subsidiary books

Omission of a transaction in the subsidiary books

Writing wrong amount in the subsidiary books

Posting a correct amount on correct side but in a wrong account

Solution

Question 4

Rs. 10,000 paid for erection and commissioning of Plant & Machinery debited to repairs and Maintenance A/c.

Rs. 4,000 paid by Shyam, credited to his A/c.

Rs.1,000 paid as cartage for office furniture debited to Carriage A/c.

Rs.5,000 paid to Gopal as his salary, debited to his A/c.

Solution

Question 5

principle

omission

commission

compensating

Solution

Question 6

Nominal A/c

Personal A/c

Real A/c

All of the above

Question 7

Errors of complete omission

Errors of principle

Errors of posting to wrong account

All of the above

Solution

Question 8

principle

compensating

commission

none of the above

Solution

Question 9

Suspense a/c

Office furniture a/c

Sales a/c

none of these

Solution

Question 10

Wrong casting of subsidiary books

Errors of carry forward

Errors of posting

All the three

Solution

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