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CBSE Questions for Class 11 Commerce Accountancy Trial Balance And Rectification Of Errors Quiz 11 - MCQExams.com
CBSE
Class 11 Commerce Accountancy
Trial Balance And Rectification Of Errors
Quiz 11
The preparation of a trial balance is for locating -
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Errors of complete commission
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Clerical errors
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Errors of principle
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All of the above
Explanation
The most important objective of trial balance is checking the accuracy of the accounts and detecting the errors. There are some errors that directly affect the trial balance i.e., the trial balance doesn't tallies while there are other errors when the trial balance may tally but it may not be accurate.
If a transaction is entered more than one time, it is known as -
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Duplicating error
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Errors of complete omission
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Errors of principle
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Compensating errors
Explanation
Error of duplication means recording any transaction twice in the subsidiary books i.e., debited and credited twice. In this case the trial balance will tally but the amount will be more.
Which of the following error will disturb the balancing of the trial balance?
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Recording in the purchases journal an in-voice for acquiring a non current asset for Rs. 60,000.
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Adding up the returns inwards journal as Rs. 11,400 instead of Rs. 2,12,600.
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Recording a sales invoice for Rs. 5,600 as Rs. 6,500 in the sales journal.
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Failing to record a purchase invoice for Rs. 54,000 in the purchases journal.
Explanation
Trial balance is prepared with the balances of the ledger accounts, if the balance of any ledger account is incorrect, the trial balance will not tally. Return inwards or sales return account always has a debit balance, when the balance of this account is understated, the credit side total of the trial balance will exceed the debit side total. This will lead to unstable trial balance.
Which of the following statements is/are true?
(i) An error in casting the subsidiary books is an error of commission.
(ii) An error in wrong casting of the sales day book will not affect the personal accounts of debtors.
(iii) Mistake in transferring the balance of an account to the trial balance will not affect the agreement of the trial balance.
(iv) The mistake of treating a liability as an income or vice versa will not affect the agreement of a trial balance.
The correct answer is -
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Only (i) of the above
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Only (ii) of the above
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Both (i) and (ii) of the above
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(i), (ii) and (iv) of the above
Explanation
Error of commission is when wrong amount is entered in the journal or ledger leading to wrong totaling and wrong balance which is transferred to the trial balance and thus the trial balance does not tallies.
An error in the sales day book will not affect the personal account of debtors because the error in posting is done in sales ledger and not debtors account. the balance in debtors account will remain the same.
The mistake of treating a liability as an income or vice versa, the agreement of a trial balance will not be affected. This is because the accounting treatment of a liability and an income is same i.e., a liability and an income both have credit balance.
An amount of Rs 15,000 withdrawn by the proprietor for his personal use has been debited to Trade Expenses Account. Which of the following rectification entry is correct?
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Drawings A/c Dr. 15,000
To Suspense A/c 15,000
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Trade Expenses A/c Dr. 15,000
To Suspense A/c 15,000
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Drawings A/c Dr. 15,000
To Trade Expenses A/c 15,000
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Trade Expenses A/c Dr. 15,000
To P & L Adj. A/c 15,000
Rs. 2,400, being the prepaid portion of insurance, was brought forward from the previous year as a credit balance in the nominal account. Identify the amount of the trial balance difference which will be placed in a suspense account -
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Dr. 4,800
0%
Cr. 4,800
0%
Cr. 2,400
0%
Dr. 2400
Explanation
Prepaid expense is an asset and has a debit balance. When it is recorded as credit balance firstly the credit entry has to be cancelled to rectify the error and another entry has to be passed with the same amount to record original carry forward entry. So two times of the amount will be present in the suspense account. It means suspense A/c will be debited by 4,800
Total of purchases book was Rs. 10,000 short. If rectification is done before preparation of trial balance then which of the following is correct?
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Purchases A/c Dr. 2,000
To Suspense A/c 2,000
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Debit purchases account with Rs. 10,000 saying "To Short total of Purchases Book Rs. 10,000".
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Credit purchases account with Rs. 10,000 saying "By Short total of Purchases Book Rs. 10,000".
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Suspense A/c Dr. 2,000
To Purchases A/c 2,000
Explanation
Since purchase books were totalled shortly by Rs. 10000, an amount of Rs.10000 has to be added to the purchases account.
Rectification will be done by debiting the purchase account with Rs.10000 and crediting the suspense account.
Hence journal will be:
Purchases A/c Dr. 2,000
To Suspense A/c 2,000
Hence a is the correct answer.
While carrying forward the total of one page of the Purchases Book to the next, the amount of Rs. 12,350 was written as Rs. 13,If this error located after preparation of trial balance then which of the following rectification entry is correct?
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Purchases A/c Dr. 900
To Profit & Loss Adj. A/c 900
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Purchases A/c Dr. 900
To Suspense A/c 900
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Profit & Loss Adj. A/c Dr. 900
To Purchases A/c 900
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Suspense A/c Dr. 900
To Purchases A/c 900
Explanation
After the preparation of trial balance change cannot be made to the original account and repost them into trial balance. So a suspense account is maintained to rectify the errors of omission. Purchase has a debit balance and if the greater amount is debited, the difference amount is credited to cancel the original entry.
Rs. 1,000 being the monthly total of discount allowed to customers was credited to discount account in the ledger. If rectification is done before preparation of trial balance then which of the following is correct?
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Discount A/c Dr. 2,000
To Suspense A/c 2,000
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Discount A/c Dr. 1,000
To Suspense A/c 2,000
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Credit the Discount Account with Rs. 2,000 saying "To Rectification of wrong credit of Rs. 1,000 for discount allowed.... Rs. 2,000.
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Debit the Discount Account with Rs. 2,000 saying "By Rectification of wrong credit of Rs. 1,000 for discount allowed.... Rs. 2,000.
Explanation
The Correct Rectification entry in the given case would be
Debit the Discount Account with Rs. 2,000 saying "By Rectification of wrong credit of Rs. 1,000 for discount allowed... Rs. 2,000.
As the discount is wrongly credited, therefore, for rectification, the discount allowed needing to be debited with the double amount.
Which of the following statements is correct?
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The trial balance is prepared after preparing the profit and loss account
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The trial balance shows only balances of assets and liabilities
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The trial balance shows only nominal account balances
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The trial balance has no statutory importance from the point of view of law
Explanation
The purpose of a trial balance is to prove that the value of all the debit value balances equal the total of all the credit value balances. If the total of the debit and the credit columns do not match then there is an error in the ledger accounts. This error must be found before a profit and loss statement and balance sheet can be produced. Apart from this there is no statutory importance of trial balance from the point of view of law.
A credit sale of Rs.1,000 to Santhanam has been wrongly passed through the purchases book. Which of the following rectification entry is correct?
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Suspense A/c Dr. 2,000
To Sales A/c 1,000
To Purchases A/c 1,000
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Purchases A/c Dr. 2,000
To Santhanam A/c 2,000
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Santhanam A/c Dr. 2,000
To Sales A/c 1,000
To Purchases A/c 1,000
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Sales A/c Dr. 1,000
Purchases A/c Dr. 1,000
To Santhanam A/c 2,000
Explanation
For the given credit sale, the correct entry that should be made is:
=> Santhanam A/c Dr. 1000
To Sales A/c 1000
The entry which was made earlier is:
=> Purchases A/c Dr. 1000
To Santhanam A/c 1000
Therefore, to nullify the effect of above entry and record the correct entry, the following rectification entry will be made:
=> Santhanam A/c Dr. 2000
To Purchases A/c 1000
To Sales A/c 1000
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 _________________.
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Debit Vehicle Maintenance A/c and credit Motor Vehicles A/c
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Debit Cash A/c and credit Motor Vehicles A/c
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Debit Motor Vehicles A/c and credit Vehicle Maintenance A/c
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Debit Vehicle Maintenance A/c and credit Cash A/c
Explanation
If an amount paid for servicing vehicles has been posted in error to Motor Vehicles account
Incorrect Entry
Motor Vehicles a/c Dr.
To Cash a/c
Correct Entry
Vehicle Maintenance A/c Dr.
To Cash a/c
Rectifying Entry
Vehicle Maintenance A/c Dr.
To credit Motor Vehicles A/c
In case the individual ledger account were accurate in all respect but a trial balance did not tally, there may be:
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Wrong recording in book of original entry.
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Wrong recording in Journal Proper but not posted at all
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Errors of posting involving the position to wrong account on correct side with correct amount
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Omission of an account from Trial Balance
Explanation
Trial balance records the debit and credit balances of all the accounts, to find the arithmetical accuracy of the books of accounts. If the trial balance is not tallying then there can be various reasons for this disparity.
If an individual ledger account is accurate in all respect and then trial balance is not agreeing it can be due to omission of an account from trial balance. This implies the absence of a debit or credit balance as a whole from the trial balance. The trial balance does not agrees in this case because the effect of the transactions of the account omitted is present in the trial balance. Here the double entry system of accounting is not fulfilled and thus trial balance does not agrees.
The trial balance checks ______________ .
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the honesty of the book - keeper.
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the honesty of the accountant
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the honesty of the cashier
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the arithmetical accuracy of the books of accounts
Explanation
Trial balance is the list of balances of all ledger accounts and cash book. It is an instrument for checking and testing the arithmetical accuracy of the posting of entries from journal to ledger. It is to check the accuracy of original records before preparing the final accounts so that the final account is error free, and going through books again after preparing final accounts will take a lot of time.
Which of the following errors is an error of omission ?
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Sale of $$Rs.500$$ was written in the Purchase Journal
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Wages paid to Mohan have been debited to his account
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The total of the sales journal has not been posted to the sales Account
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None of these.
Explanation
Error of omission is when a transaction is omitted to be recorded in the subsidiary books, there is neither debit or credit effect of such errors. Omission in posting total of sales journal into sales account refers to omission of transactions related sales and debtors.
Which of the following errors will not affect the trial balance ?
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A credit Sale of goods to X $$Rs.17$$ posted as $$Rs.71$$
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A Cash Sale of goods to X $$Rs.17$$ posted as $$Rs.71$$
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A Credit Sale of furniture to X $$Rs.17$$ posted as $$Rs.71$$
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None of the above
Explanation
For credit sale of furniture the entry passed is -
Debtor's A/c Dr
To Furniture A/c
When the amount posted in the accounts is incorrect but same, the trial balance will tally. The balances of ledger accounts is transferred to the trial balance and the balance of these accounts will not affect the agreement of the trial balance.
On opening Suspense Account the words recorded in the particular column are :
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By Balance b/d
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To Balance b/f
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By Balance b/f
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Difference in Trial Balance
Explanation
After finding errors in the trial balance, the original books of accounts cannot be changed. To rectify the errors, a suspense account is opened with the difference in the trial balance so that the trial balance agrees (pending the correction of the errors causing this difference). This is the only time when entry is made without an effect on any other account. After the trial balance tallies with the suspense account, the errors are rectified.
Wages paid for installation of machinery Rs. 2,750 had been debited to wages account as Rs. 5,If this error located after preparation of final account then which of the following rectification entry is correct?
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Machinery A/c Dr. 2,500
Suspense A/c Dr. 2,750
To Profit & Loss Adj. A/c 5,250
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Profit & Loss Adj. A/c Dr. 5,250
To Machinery A/c 2.500
To Suspense A/c 2,750
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Profit & Loss Adj. A/c Dr. 5,250
To Machinery A/c 2,750
To Suspense A/c 2,500
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Machinery A/c Dr. 2,750
Suspense A/c Dr. 2,500
To Profit & Loss Adj. A/c 5,250
Explanation
Machinery A/c Dr.
2
,
7
5
0
Suspense A/c Dr.
2
,
5
0
0
To Profit & Loss Adj. A/c
5
,
2
5
0
The mentioned transaction has two errors. Since the error is located after the preparation of the final account, rectification needs to be passed through the profit & loss adjustment account.
1) Recording of capital expenditure as revenue expenditure. It's an error of principle.
2) Amount of Rs. 2750 is recorded as Rs.5250. It's an error of commission.
To rectify the error, the following rectification entry needs to be passed:
Machinery A/c Dr. 2750 (with the actual amount)
Suspense A/c Dr. 2500 (due to wrong amount posting)
To P&L Adjustment A/c 5750 (to affect the P&L with the total amount)
Purchase of office furniture for $$Rs.6000$$ has been debited to General Expenses.Account. Its is
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An error commission
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An error of omission
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An error of principle
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None of these
Explanation
When the fundamental principle of accounting is violated while preparing the accounts, this is known as error of principle. These errors are made when there’s no proper distinction between capital and revenue items i.e., capital expenditure being treated as revenue expenditure and vice versa.
Amount spent on acquiring fixed assets such as office furniture is known as capital expenditure and this is debited to the furniture account as it is a fixed asset and it is used for a number of years and so its expenses is distributed.
General expenses are those the effect of which is observed in the current year only and it is deducted from the profit of the year.
The preparation of a Trial Balance helps in :
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Locating errors of complete omission
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Locating errors of principle
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Locating errors of commission
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None of these
Explanation
The main objective of the trial balance is to ascertain the accuracy of accounts and locating errors. There are errors because of which the trial balance doesn't tally. While there are other errors where the trial balance tallies but the result will be incorrect.
Error of complete omission, an error of principle, and error of commission are those errors that do not affect the agreement of trial balance.
Goods costing Rs.10,000 taken by the proprietor for personal use were not recorded. The error __________ .
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Is an error of commission
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Will affect the Trial Balance
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Will not affect the Net Profit
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None of these
Explanation
When goods taken by proprietor for personal use is not recorded, this is error of omission, i.e., both the debit and credit aspect of the transaction is not recorded. Thus it does not affect the trial balance as any part of the transaction is not recorded.
It will affect the net profit because gross profit will be less because of increased value of purchases account balance.
Sales to Meena Rs.143 was credited asThis ____________ .
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is an error of omission
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will not affect the trial balance
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Will not affect the profit
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None of these
Explanation
Wrong amount posted is an error of posting. This will affect the trial balance because wrong amount has been credited to the ledger account, while the debit aspect is correct. The credit balance of the trial balance will exceed the debit balance leading to unbalanced trial balance.
This will affect the profit because balance of sales account is shown in the trading account for calculating the gross profit, any change and the balance of sales account will affect the profit. This gross profiit is transferred to the profit and loss account to determine the net profit of the business, which will change because of change in gross profit because of change in balance of sales account.
Sales of office furniture has been credited to Sales Account. It is :
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A Clerical error
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An error of principle
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An error of omission
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Compensating error
Explanation
Sale of office furniture is a capital profit or capital income, it cannot be entered as normal sale. Error of principle is when basic accounting principle is not followed. There is no distinction between capital and revenue items. Here capital income is treated as revenue income. This error has no effect on the agreement of the trial balance as the right amount is debited or credited though to the wrong account but the net effect is the same.
Rs.10,000 paid in cash for repair of a newly purchased old machine were debited to repairs account. This error:
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is an error of omission
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will affect the trial balance
0%
will not affect the profit
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None of these
Explanation
When cash is paid for repairs of newly purchased old machine it is a capital expenditure and is debited to machinery account as it enhances the efficiency of the machinery as it has to be used for a longer period of time.
When this amount of repair is debited to repairs account, this is known as error of principle as capital expenditure is treated as revenue expenditure.
This error will not affect the trial balance because expense has been rightly debited though to the wrong account but the net effect remains the same, so the trial balance will tally.
This error surely affects the profit because it is a capital expenditure which is added to the value of the machinery, while here it has been written as revenue exoenditure which is deducted from the profit of the year. This in turn reduces the profit for the year.
Rs.10,000 paid in cash for installation of a new machine were debited to Installation Expenses Account. This error:
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is an error of omission
0%
will affect the trial balance
0%
Will not affect the profit
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None of these
Explanation
Installation expense on the purchase of new machinery is added to the value of the machinery. Any expense incurred on machinery at the time of purchase to get it in place and ready for use is capital expenditure and added to the value of the machinery.
When installation expense is debited to installation expense account, this is known as error of principle. Here no distinction is made between capital and revenue items. Here capital expenditure is debited as revenue expenditure.
This error does not affects the agreement of the trial balance as the correct amount is debited only the account is wrong, the net effect is same.
This error affects the profit of the year, as revenue expenditure is deducted from the profit and loss account, while capital expenditure is transferred to the balance sheet.
Total of Sales Book cost Rs. 900 short.This error ____________ .
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In an error of complete omission
0%
Will not affect the trial balance
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Will not affect the profit
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None of these
Explanation
When the total of any account is short, this is an error of casting. This will affect the agreement of trial balance because this is one sided error. In the case the debit side will be greater that the credit side because sales account always has a credit balance and the sales account is short here. So the trial balance will not tally.
This will affect the profit of the year as net profit is calculated from the gross profit which is affected by the increase and decrease in the balance of sales account.
Sales to Meena Rs.143 was posted to Meenu. This error:
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In an error of omission
0%
Will not affect the trial balance
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Will affect the profit
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None of these
Explanation
Sales to Meena posted to Meenu is an error of posting. The actual entry for the transaction is-
Meena A/c Dr 143
To Sales A/c 143
The incorrect entry passed here is-
Meenu A/c Dr 143
To Sales A.c 143
Here the amount has been posted correctly and sales account is also correct. There is an error only in the name of the account and this does not affects the trial balance because amount is the same.
The Total of Sales Book was not posted to the ledger at all. This error-
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is an error of complete omission
0%
will not affect the trial balance
0%
will not affect the profit
0%
none of these
Explanation
When the total sales book is not posted to the ledger at all, this is an error of partial error. Trial balance is prepared from the balances of the ledger accounts. This error will affect the trial balance because sales account ledger always has a credit balance and a missing balance will lead to unstable balance. Here the debit balance of the trial balance will exceed the credit balance because of the missing credit balance of sales account.
This will affect the profit of the year because sales account balance is transferred to the credit of trading account which affects the profit. Missing sales account balance decreases the profit of the year.
Both the discount columns of the cash book were omitted to be posted in the ledger. This error-
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is an error of complete omission
0%
will not affect the Trial Balance
0%
will not affect the Profit
0%
none of these
Explanation
When both the discount columns are omitted to be posted in the ledger, this is known as error of posting. This error affects the trial balance, here a debit as well as a credit account of the trial balance is missing which causes differences in the balance of the trial balance. The two discount accounts have different balances which may not be the same to cancel the net effect of the omission.
This will affect the profit because the balances of the discount accounts is included in the profit and loss account to calculate the net profit, so if these accounts are omitted then the profit will not be correct.
The total of a folio in the Sales Book Rs.1,000 was carried forward as RsThis error
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in an error of complete omission
0%
will not affect the trial balance
0%
Will not affect the profit
0%
none of these
Explanation
When the total of sales book is carried forward with wrong amount, this is error of posting. This will affect the trial balance because if incorrect amount is transferred to the trial balance the trial balance will not agree. In this case the trial balance will show more debit balance as sales account is undercast, value of debit side of trial balance exceeds the credit side.
This will affect the profit of the year because balance of sales account is included in the trading account to calculate gross profit, any change in the sales account balance will affect the gross profit. This gross profit is transferred to the profit and loss account to find the net profit.
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