Trial Balance and Rectification of Errors Test 8

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Trial Balance and Rectification of Errors Test 8

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Question 1
1 / -0

A return of goods worth Rs. 5,600 was not recorded. This is an example of error of __________.

A
Omission

B
Principle

C
Judgement

D
Commission

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. They are of 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. A return of goods worth Rs. 5,600 was not recorded, which is an example of error of complete omission.
Question 2
1 / -0

Credit sales of Rs.5500 not recorded in the Sales day book, to the extent______.

A
profit is understated

B
profit is overstated

C
loss understated

D
not affected
Question 3
1 / -0

Rs.5500 incurred on sundry expense inadvertently recorded in the books of account as Rs.550. This is an example of ..........

A
fraud

B
error of commission

C
error of principle

D
compensatory error

Solution

Error of commission means when there is error in totaling or posting of the transaction.
Question 4
1 / -0

Balance of suspense A/c is transferred to____________.

A
Profit and loss A/c

B
Balance sheet

C
Trading A/c

D
No entry

Solution

A suspense account is an account in the general ledger in which amounts are temporarily recorded. A suspense account is used when the proper account cannot be determined at the time the transaction is recorded. The balance of suspense account is transferred to Balance sheet.
Therefore, B is the correct option.
Question 5
1 / -0

Rectification of errors detected in the next financial year is done through ___________.

A
Suspense A/c

B
Profit and loss A/c

C
Profit and loss adjustment A/c

D
Profit and loss appropriation A/c

Solution

Ideally, all errors need to be rectified in the same financial year to show the true and fair view of the books of account maintained by the organization.

If errors are not rectified in the same financial year, the same errors can be rectified in the next financial year. All such errors in the next financial year will be done through Profit & loss adjustment account.
Question 6
1 / -0

Credit sales of Rs.5750 to M/s Ram was wrongly debited to Mr. Ram's Account. On rectification of the error the profit and loss_______.

A
will remain same

B
decrease by Rs. 5750

C
increase by Rs.5750

D
increase to the extent of gross profit margin

Solution

Credit sales has to be debited to Mr. Ram's Account. There will be no affect of such entry on profit & loss account as sales is recorded correctly.
Question 7
1 / -0

If there is a difference in the Trial Balance and finalization of F/A cannot be further delayed, the difference would be put to ____________.

A
Suspense A/c

B
Drawing A/c

C
Miscellaneous expense A/c

D
Miscellaneous income A/c

Solution

The final accounts are drawn from the Trial Balance. A trial balance is a statement that consists of the balances of all the ledger accounts. It has the balances of Assets, Liabilities, Debtors, Creditors, Expenses, and Income accounts. Usually, a trial balance is tallied before the preparation of the Final accounts. But, in the case where the preparation of the final accounts cannot be delayed, the difference is put in the Suspense account. If the Assets side is more than the Suspense Account will have a credit balance and will be shown on the liabilities side of the Balance Sheet. If the liabilities side is more then it will show a debit balance and will be shown on the Assets side of the Balance Sheet,
The correct answer is A,
Question 8
1 / -0

$$Rs.4,500$$ received from M/s Ram was credited to Mr. Ram a/c. How will this affect the profit or loss?

A
Increase in profit by $$Rs.4,500$$.

B
Decreases in profit by $$Rs.4,500$$.

C
No affect at all.

D
Debtors a/c will be overcast by $$Rs.4,500$$.

Solution

$$Rs.4500$$ received from M/s Ram is credited to Mr. Ram. Is an error of commission. There will not be any effect on profit & loss account as it is affecting the account of person.

Rectification entry will be passed as under:
Mr. Ram A/c $$Dr. 4500$$
To M/s Ram $$4500$$
Question 9
1 / -0

Credit sales of Rs.5500 not recorded in the Sales day book. On rectification in subsequent year________.

A
Profit and loss a/c will be credited by Rs.5500

B
Profit and loss adjustment a/c be credited by Rs. 5500

C
Sales a/c will be increased by Rs.5500

D
No effect

Solution

Credit sales of Rs.5500 not recorded in sales day book resulted a short credit to sales account, hence the profit of the year has decreased by the same amount. Its a complete omission of an accounting entry.
If the same transaction is rectified in the subsequent year, this will be done through profit & loss adjustment account by crediting the amount of Rs.5500.
Question 10
1 / -0

The error of posting affects__________.

A
One A/c

B
Two A/c

C
Subsidiary books only

D
Any of the above three

Solution

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 carrying forward; error of balancing; error of posting to correct account but with wrong amount; error of posting to the correct account but on the wrong side; posting to the wrong side with the wrong amount and omitting to show an account in the trial balance.

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Re-Attempt Weekly Quiz Competition

Trial Balance and Rectification of Errors Test 8

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Trial Balance and Rectification of Errors Test 8

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Rank

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Question 1

Omission

Principle

Judgement

Commission

Solution

Question 2

profit is understated

profit is overstated

loss understated

not affected

Question 3

fraud

error of commission

error of principle

compensatory error

Solution

Question 4

Profit and loss A/c

Balance sheet

Trading A/c

No entry

Solution

Question 5

Suspense A/c

Profit and loss A/c

Profit and loss adjustment A/c

Profit and loss appropriation A/c

Solution

Question 6

will remain same

decrease by Rs. 5750

increase by Rs.5750

increase to the extent of gross profit margin

Solution

Question 7

Suspense A/c

Drawing A/c

Miscellaneous expense A/c

Miscellaneous income A/c

Solution

Question 8

Increase in profit by $$Rs.4,500$$.

Decreases in profit by $$Rs.4,500$$.

No affect at all.

Debtors a/c will be overcast by $$Rs.4,500$$.

Solution

Question 9

Profit and loss a/c will be credited by Rs.5500

Profit and loss adjustment a/c be credited by Rs. 5500

Sales a/c will be increased by Rs.5500

No effect

Solution

Question 10

One A/c

Two A/c

Subsidiary books only

Any of the above three

Solution

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