Trial Balance and Rectification of Errors Test 42

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Trial Balance and Rectification of Errors Test 42

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Question 1
1 / -0

Which of the following error cannot be disclosed by trial balance?

A
Error of principle.

B
Compensating errors.

C
Error of complete omission.

D
All of the above.
Solution
There are few errors which cannot be disclosed by trial balance as these are affecting both the side of trial balance. In such cases, trial balance will not have any difference and both the sides will show an equal amount.
Below errors cannot be disclosed by trial balance:
Error of principle- Revenue expenditure are debited as capital expenditure
Compensating error- One error is compensated by another error
Error of complete omission- Credit sale is completely omitted in recording.
Question 2
1 / -0

Which of the following error can affect the agreement of trial balance?

A
Wrong totaling of subsidiary books.

B
Error of principle.

C
Compensating errors.

D
All of the above.

Solution

Error of principle and compensating error cannot be disclosed from the trial balance as these are double sided error. In both the types of error, trial balance will not have any affect.

Wrong total of subsidiary books will surely affect the trial balance as its a single side error. For example, sales day book totaled as Rs. 4500 instead of Rs.5400.
Question 3
1 / -0

A re-payment of Rs$$15,000$$ has been posted to Janki Loan A/c, whereas Rs$$3,000$$ of this amount was paid as interest on the loan. To correct this error which journal entry would require?

A
Debit Interest A/c and credit Janki Loan A/c with Rs$$3,000$$

B
Debit Interest A/c and credit Janki Loan A/c with Rs$$15,000$$

C
Debit Cash A/c and credit Janki Loan A/c with Rs$$3,000$$

D
Debit Janki Loan A/c and credit Interest A/c with Rs$$3,000$$

Solution

It is an error of principle as expenses are debited to the liability account. Hence rectification entry need to be passed as under:

Interest A/c Dr. 3000
To Janki Loan A/c 3000
Question 4
1 / -0

An expense on major repairs of machinery purchased second hand has been debited to repairs account; it involves an error of _________.

A
Error of omission

B
Error of commission

C
Error of principle

D
Compensating error

Solution

Heavy expenditure done on an overhaul of second machinery is a capital expenditure as it is going to increase the efficiency of the machinery. It has to be debited to machinery account.
If this has been debited to repairs and maintenance expenses account, its an error of principle.

Rectification entry will be passed as under:

Machinery A/c Dr.
To Repairs & Maintenance A/c
Question 5
1 / -0

Which of the following account(s) will be affected, while rectifying the error of a purchase return of Rs.$$200$$ to Mr."A" entered in sales book instead of purchase return book?

A
A's account only

B
Sales account only

C
Purchase returns account and Sales account

D
Purchases account only

Solution

Correct entry for Purchase Return:
Mr A A/c Dr....$$Rs.200$$
To Purchase Return A/c....$$Rs.200$$
The same has been erroneously recorded as :
Mr. A A/c Dr....$$Rs.200$$
To Sales A/c....$$Rs.200$$
In the given scenario, the account which remains unaffected is Mr. A's Account.
The account which are affected are Sales and Purchase Return Accounts.
Question 6
1 / -0

If an amount paid for servicing vehicles has been posted in error to Motor Vehicles account the journal entry necessary to correct this error should require which of the following:

A
Debit Vehicle maintenance account and credit Motor Vehicles account

B
Debit Cash account and credit Motor vehicles account

C
Debit Vehicle maintenance account and credit Cash account

D
Debit Motor vehicles account and credit Vehicle maintenance account

Solution

The expenses should be debited to expenses account so to rectify the same
The Journal Entry will be
Vehicle Maintenance a/c Dr.
To Motor Vehicle a/c
Question 7
1 / -0

Rs $$2,18,400$$ paid to a supplier has been posted to the supplier's account as Rs$$2,14,800$$. Identify the amount of the trial balance difference which will be placed in a suspense account.

A
Dr. $$3,600$$

B
Dr. $$2,18,400$$

C
Cr. $$3,600$$

D
Dr. $$7,200$$

Solution

Wrong posting of an amount in a single side of the account will affect the trial balance. In the given situation an amount of Rs.218400 paid to a supplier is posted as Rs.214800. It is an error of commission. There is a short debit to the supplier's account of Rs.3600 (Rs.218400-Rs.214800).
The difference of Rs.3600 will be placed in suspense account.
Question 8
1 / -0

A sold goods of 500/- to Z which is entered in purchase book as 5,000. What will be the entry after rectification?

A
Z's A/c Dr. 5,500

To Purchase A/c 5,000

To Sales A/c 500

B
Z's A/c Dr. 5,500

To A 5,500

C
Purchase A/c Dr. 4,500

To A 4,500

D
Z's A/c Dr. 5,500

To SA/cs 5,500

Solution

There are two error happened in this transaction.

Sales of Rs.500 recorded as Rs.5000 as purchases. Instead of debit of Rs.500 to Mr. Z. his account is credited with Rs.5000. Purchase account is wrongly debited by Rs.5000 and sales of Rs.500 is not recorded in the books.

Rectification entry will be as under:

Z's A/c Dr. 5500
To Purchase A/c 5000
To Sales A/c 500
Question 9
1 / -0

Purchases book was undercast by Rs$$10,000$$. If this error located after preparation of final account then which of the following rectification entry is correct?

A
Purchases A/c Dr. $$10,000$$
To Profit & Loss Adj. A/c $$10,000$$

B
Profit & Loss Adj. A/c Dr. $$10,000$$
To Suspense A/c $$10,000$$

C
Suspense A/c Dr. $$10,000$$
To Profit & Loss Adj. A/c $$10,000$$

D
Profit & Loss Adj. A/c Dr. $$10,000$$
To Purchases A/c $$10,000$$

Solution

Purchase book was undercast by Rs.10000. It is a single-sided error and affected the profit & loss account. Profit of the year is overstated as purchases book short by Rs.10000.
This needs to be rectified in the subsequent year as error has located after the preparation of final accounts. Below rectification will be passed:

Profit & Loss Adjustment A/c Dr. 10000
To Suspense A/c 10000
Question 10
1 / -0

While checking the accounts of ABC the following discrepancies were noticed, even though the trial balance was made to balance by putting the difference to Suspense A/c.
(i) Sales day book for the month of June was found overcast by Rs$$7,000$$.
(ii) A credit purchase of Rs$$3,000$$ was omitted to be recorded in the purchase day book.
(iii) Rs$$4,300$$ received from A credited to A A/c Rs $$3,400$$.
(iv) Purchase of Office Equipment worth Rs $$5,000$$ included in trading purchases.
From the above details what would have been the difference in Trial Balance which was made to balance by opening Suspense A/c.

A
Debit side short by Rs$$9,100$$

B
Credit side short by Rs$$9,100$$

C
Debit side more by Rs$$7,900$$

D
Credit side more by Rs$$6,100$$

Solution

The following are the rectification entries of the above transactions:

(i) Sales a/c Dr. 7000
To Suspense a/c 7000
(ii) Purchase a/c Dr. 3000
To Suspense a/c 3000
(iii) Suspense a/c Dr. 900
To A a/c 900
(iv) Office Equipment a/c Dr. 5000
To Purchases a/c 5000

Suspense a/c
Dr. Cr.
Particulars Amt Particulars Amt
To A a/c 900 By Sales a/c 7000
To Difference in Trial Balance 9100 By Purchases a/c 3000

10000 10000
Hence, A is the correct option.

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Particulars	Amt	Particulars	Amt
To A a/c	900	By Sales a/c	7000
To Difference in Trial Balance	9100	By Purchases a/c	3000

	10000		10000

Trial Balance and Rectification of Errors Test 42

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Trial Balance and Rectification of Errors Test 42

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Question 1

Error of principle.

Compensating errors.

Error of complete omission.

All of the above.

Solution

Question 2

Wrong totaling of subsidiary books.

Error of principle.

Compensating errors.

All of the above.

Solution

Question 3

Debit Interest A/c and credit Janki Loan A/c with Rs$$3,000$$

Debit Interest A/c and credit Janki Loan A/c with Rs$$15,000$$

Debit Cash A/c and credit Janki Loan A/c with Rs$$3,000$$

Debit Janki Loan A/c and credit Interest A/c with Rs$$3,000$$

Solution

Question 4

Error of omission

Error of commission

Error of principle

Compensating error

Solution

Question 5

A's account only

Sales account only

Purchase returns account and Sales account

Purchases account only

Solution

Question 6

Debit Vehicle maintenance account and credit Motor Vehicles account

Debit Cash account and credit Motor vehicles account

Debit Vehicle maintenance account and credit Cash account

Debit Motor vehicles account and credit Vehicle maintenance account

Solution

Question 7

Dr. $$3,600$$

Dr. $$2,18,400$$

Cr. $$3,600$$

Dr. $$7,200$$

Solution

Question 8

Z's A/c Dr. 5,500To Purchase A/c 5,000To Sales A/c 500

Z's A/c Dr. 5,500To A 5,500

Purchase A/c Dr. 4,500To A 4,500

Z's A/c Dr. 5,500To SA/cs 5,500

Solution

Question 9

Purchases A/c Dr. $$10,000$$To Profit & Loss Adj. A/c $$10,000$$

Profit & Loss Adj. A/c Dr. $$10,000$$To Suspense A/c $$10,000$$

Suspense A/c Dr. $$10,000$$To Profit & Loss Adj. A/c $$10,000$$

Profit & Loss Adj. A/c Dr. $$10,000$$To Purchases A/c $$10,000$$

Solution

Question 10

Debit side short by Rs$$9,100$$

Credit side short by Rs$$9,100$$

Debit side more by Rs$$7,900$$

Credit side more by Rs$$6,100$$

Solution

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Z's A/c Dr. 5,500

To Purchase A/c 5,000

To Sales A/c 500

Z's A/c Dr. 5,500

To A 5,500

Purchase A/c Dr. 4,500

To A 4,500

Z's A/c Dr. 5,500

To SA/cs 5,500

Purchases A/c Dr. $$10,000$$
To Profit & Loss Adj. A/c $$10,000$$

Profit & Loss Adj. A/c Dr. $$10,000$$
To Suspense A/c $$10,000$$

Suspense A/c Dr. $$10,000$$
To Profit & Loss Adj. A/c $$10,000$$

Profit & Loss Adj. A/c Dr. $$10,000$$
To Purchases A/c $$10,000$$