Trial Balance and Rectification of Errors Test 38

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Trial Balance and Rectification of Errors Test 38

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Question 1
1 / -0

Non-recording of any transaction in primary books is an example of error of ________.

A
Principle

B
Omission

C
Commission

D
Compensatory

Solution

The errors of omission may be committed at the time of recording the transaction in the books of original entry or while posting to the ledger. There can be two types:
(i) error of complete omission
(ii) error of partial omission
When a transaction is completely omitted from recording in the books of original record, it is an error of complete omission. For example, credit sales to Mohan Rs. 10,000, not entered in the sales book. When the recording of transaction is partly omitted from the books, it is an error of partial omission. In the above example, credit sales had been duly recorded in the sales book but the posting from sales book to Mohan's account has not been made, it would be an error of partial omission.
Question 2
1 / -0

In the effect of errors is cancelled out the resultant errors are called______errors.

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 as compensating errors. Such errors do not affect the tallying of the trial balance. When the effect of errors is cancelled out, the resultant error are called as compensating errors.
Question 3
1 / -0

$$Rs.5000$$ paid as cartage on new Plant and Machinery. This was debited to carriage inward 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.
$$Rs.5000$$ paid as cartage on new plant & machinery has to be debited to Plant & Machinery Account.
Question 4
1 / -0

__________ affect only one account.

A
Errors of casting

B
Errors of carry forward

C
Errorrs of posting

D
All the three

Solution

Option D.
The errors which affect only one account can be rectified by giving an explanatory note in the account affected or by recording a journal entry with the help of the Suspense account.
Examples of such errors are error of casting, error of carry forward, error of balancing, error of posting to correct account but with wrong amount, error of posting to the correct account but on wrong side, posting to the wrong side with the wrong amount, omitting to show and account in the trial balance affect only one account.
Question 5
1 / -0

Select the false statement:

A
Errors of commission lead to difference in Trial balance.

B
Trial balance is left unaffected by errors of principle.

C
The agreement of trial balance is no guarantee that there is no error in the accounts.

D
All rectification entries are necessarily passed through suspense A/c.

Solution

Suspense account is created in the books of account only to record the those transactions which requires more clarification or there is a difference in trial balance, the difference is parked in suspense account.

There are rectification entries which are directly passed and need not to be passed through suspense account. Like , in case of error of principle where capital expenditure are wrongly debited as revenue expenditure.
Question 6
1 / -0

$$Rs.510$$ paid on carriage of office equipment was debited to sundry expenses a/c. On rectification ________ account will be debited.

A
suspense

B
office equipment

C
sales

D
none of these

Solution

This is an error of principle as amount is spent on freight while purchasing office equipment. Hence this has to be debited to Office equipment a/c.

Rectification entry will be passed as under:
Office equipment Dr. 510
To Sundry Expenses A/c 510
Question 7
1 / -0

Credit sales of Rs.5000 was wrongly credited to office equipment. On rectification of this error next year _______.

A
Gross Profit will decrease by Rs.5,000

B
Gross profit will increase by Rs.5,000

C
Sales will increase by Rs.5,000

D
Sales will decrease by Rs.5,000

Solution

Sales has to be recorded in Trading account by giving a credit to sales account. $$Rs.5000$$ sales wrongly credited to office equipment account. It is an error of principle as revenue receipts is recorded as capital receipt.
In such situation gross profit of the current year understated by $$Rs.5000$$.
On rectification in subsequent year, gross profit will increase by $$Rs.5000$$.
Question 8
1 / -0

Errors in __________ account does not affect profit and loss account.

A
personal

B
real

C
both A & B

D
nominal

Solution

Personal accounts are the accounts of individual persons, which are classified as debtors and creditors, which are shown in balance sheet. Hence any error in personal account will bot effect the profit & loss account.

Real account are the account of assets or things which are also part of balance sheet hence any error in such account will not effect profit & loss account.
Question 9
1 / -0

$$Rs.4500$$ spent on repair of office equipment debited to office equipment a/c.On rectification of profit and loss a/c ________.

A
Profit decrease by $$Rs. 4500$$

B
Understate profit by $$Rs.4500$$

C
No affect at all

D
Debtors a/c will be overcast by $$Rs.4500$$

Solution

Repairs & Maintenance is a revenue expenditure. This has to be debited to expenses account in profit & loss account. Rectification entry will be passed as under:

Profit & Loss A/c Dr. 4500
To Office Equipment 4500

This will result a decrease of profit by Rs.4500.
Question 10
1 / -0

Errors in________affects profit and loss A/c.

A
Personal A/c

B
Real A/c

C
Nominal A/c

D
None

Solution

If capital expense is recorded as a revenue expenses then it will affect the profit and loss a/c.

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Trial Balance and Rectification of Errors Test 38

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Trial Balance and Rectification of Errors Test 38

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Question 1

Principle

Omission

Commission

Compensatory

Solution

Question 2

Principle

Compensating

Commission

None of the above

Solution

Question 3

principle

omission

commission

compensating

Solution

Question 4

Errors of casting

Errors of carry forward

Errorrs of posting

All the three

Solution

Question 5

Errors of commission lead to difference in Trial balance.

Trial balance is left unaffected by errors of principle.

The agreement of trial balance is no guarantee that there is no error in the accounts.

All rectification entries are necessarily passed through suspense A/c.

Solution

Question 6

suspense

office equipment

sales

none of these

Solution

Question 7

Gross Profit will decrease by Rs.5,000

Gross profit will increase by Rs.5,000

Sales will increase by Rs.5,000

Sales will decrease by Rs.5,000

Solution

Question 8

personal

real

both A & B

nominal

Solution

Question 9

Profit decrease by $$Rs. 4500$$

Understate profit by $$Rs.4500$$

No affect at all

Debtors a/c will be overcast by $$Rs.4500$$

Solution

Question 10

Personal A/c

Real A/c

Nominal A/c

None

Solution

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