Trial Balance and Rectification of Errors Test 40

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Trial Balance and Rectification of Errors Test 40

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Question 1
1 / -0

Errors of commission arises when any transaction is _____________.

A
recorded in a fundamentally incorrect manner

B
incorrectly recorded; either wholly or partially

C
omitted to be recorded

D
none of the above

Solution

Error of Commission is where any transaction is recorded erroneously.
For eg:
1. A transaction is recorded on the right side of the account but twice.
2. A transaction is recorded at an incorrect amount amount but at the right side of the account.
Question 2
1 / -0

Error of commission arises when ___________.

A
any transaction is incorrectly recorded, either wholly or partially

B
any transaction is left either wholly or partially

C
any transaction is recorded in a fundamentally incorrect manner.

D
None of these

Solution

Errors of commission are the errors that are committed due to wrong posting of transactions, wrong totaling or balancing of the accounts, the wrong casting of the subsidiary books, or wrong recording of the 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 cash book. 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 in the trial balance
Question 3
1 / -0

In case of trial balance does not agree, the difference is put to _________.

A
suspense A/c

B
drawing A/c

C
capital A/c

D
trading A/c
Question 4
1 / -0

Errors of carry forward from one year to another year affect __________________.

A
personal account

B
real account

C
nominal account

D
personal account & real account
Question 5
1 / -0

Purchased goods from Gopal for Rs.3,600 but was recorded in Gopal's A/c as Rs.6.300, in the rectifying entry, Gopal's A/c will be debited with ___________.

A
Rs. 9,900

B
Rs. 2,700

C
Rs. 2,600

D
Rs. 6,300

Solution

As Gopal is credited with 6300 instead of 3600. To rectify this error, Gopal account should be debited with the difference i.e., 2700 (6300-3600).

Correct Entry
Purchases a/c Dr. 3600
To Gopal a/c 3600

Incorrect Entry
To Gopal a/c (wrong posting in ledger) 6300

Rectifying Entry
Gopal a/c Dr. 2700
Question 6
1 / -0

Consider the following statements:
A credit purchase during the accountancy year which was not recorded in the books of account but included in the closing stock is to be:
1. Added to the purchase account
2. Added to the creditor's account
3. Subtracted from the closing stock
4. Added to the opening stock
Which of the statements given above is/are correct?

A
3 only

B
1 and 2

C
2 and 3

D
2, 3 and 4

Solution

Accounting entry for credit purchase will be as under:

Purchase A/c Dr.
To Creditors A/c

Hence, if the transaction is not recorded in the books of account, it has to be:
1. Added to purchase account
2. added to the creditors account.
Question 7
1 / -0

Which of the following is not true of a trial balance?

A
It proves that the total debits equal total credits, if it balances.

B
It facilities preparation of financial statements.

C
It proves that no errors have been made in recording transactions, if it balances.

D
It will not detect an error where the accounts debited and credited and reversed to recording a particular transaction.

Solution

Agreeing of trial balance off course proves that the books of account are arithmetical correct but it does not confirm that the books are completely error free. There are other type of errors like error of principle and error of omission, which does not affect the trial balance.
Hence this can not be said that tallying of trial balance proves that books are error free.
Question 8
1 / -0

If a receipt of Rs.200 from Rajesh (our debtor) has not been recorded in the books, the profit would show __________.

A
an increase of Rs. 2000

B
a decrease of Rs. 200

C
neither an increase nor a decrease

D
none of the above

Solution

The transaction has not been recorded at all which is an error of omission.
Also, this journal has a direct effect in the balance sheet which does not affect the profit/loss account.
In either case, there would not be increase or decrease in profit.
Question 9
1 / -0

If purchase return of Rs.2,000 has been wrongly posted to the debit of the sales return account, but has been correctly entered in the supplier's account, the total of ___________________________.

A
trial balance would show the debit side to be Rs.2,000 more than the credit

B
trial balance would show the debit side to be Rs.2,000 more than the debit

C
debit side of the trial balance will be Rs. 4,000 more than the credit side

D
credit side of the trial balance will be Rs. 4,000 more than the debit side
Question 10
1 / -0

A sale of Rs. $$50,000$$ to A was entered as a sale to B. This is an example of ___________.

A
error of omission

B
error of commission

C
compensating error

D
error of principle

Solution

When error has committed while posting, its called an error of commission.
Sales of $$Rs.50000$$ to A is entered as sales to B, its an error of commission. There will be no affect on trial balance due to this.
Rectification entry will be passed as under:

Mr. A Dr. $$50000$$
To Mr. B $$50000$$

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Trial Balance and Rectification of Errors Test 40

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Question 1

recorded in a fundamentally incorrect manner

incorrectly recorded; either wholly or partially

omitted to be recorded

none of the above

Solution

Question 2

any transaction is incorrectly recorded, either wholly or partially

any transaction is left either wholly or partially

any transaction is recorded in a fundamentally incorrect manner.

None of these

Solution

Question 3

suspense A/c

drawing A/c

capital A/c

trading A/c

Question 4

personal account

real account

nominal account

personal account & real account

Question 5

Rs. 9,900

Rs. 2,700

Rs. 2,600

Rs. 6,300

Solution

Question 6

3 only

1 and 2

2 and 3

2, 3 and 4

Solution

Question 7

It proves that the total debits equal total credits, if it balances.

It facilities preparation of financial statements.

It proves that no errors have been made in recording transactions, if it balances.

It will not detect an error where the accounts debited and credited and reversed to recording a particular transaction.

Solution

Question 8

an increase of Rs. 2000

a decrease of Rs. 200

neither an increase nor a decrease

none of the above

Solution

Question 9

trial balance would show the debit side to be Rs.2,000 more than the credit

trial balance would show the debit side to be Rs.2,000 more than the debit

debit side of the trial balance will be Rs. 4,000 more than the credit side

credit side of the trial balance will be Rs. 4,000 more than the debit side

Question 10

error of omission

error of commission

compensating error

error of principle

Solution

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