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CBSE Questions for Class 11 Commerce Accountancy Trial Balance And Rectification Of Errors Quiz 13 - MCQExams.com
CBSE
Class 11 Commerce Accountancy
Trial Balance And Rectification Of Errors
Quiz 13
Which of the following is true about a trial balance?
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It lists down the balances of accounts
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It lists down the balances of a balance sheet
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It is a kind of financial statement
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It is not a part of accounting cycle
Explanation
A
trial balance
is a
list
of all the general ledger accounts (both revenue and capital) contained in the ledger of a business.
Purchase of office furniture worth Rs. 20,000 has been debited to the General Expenses 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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An error of commission
Explanation
Error of principle is when the basic principle of accounting is not followed. In this there is no distinction between capital and revenue items. Such errors do not affect the agreement of the trial balance because the accounting treatment is correct only the principle of accounting is not followed.
In the case, furniture is an asset and expenditure on it is classified as capital expenditure and is transferred to the balance sheet. General expense is revenue expenditure and is charged to the profit and loss account. Trial balance will not be affected in this error.
Match List-I with List-II and select the correct answer using the codes given the lists.
List-I
List-II
I. Compensating errors
(a) Not recording a business transaction
II. Errors of omission
(b) Charging a Revenue item to capital
III. Errors of principle
(c) Writing a debit item on the credit side and a credit item on the debit side of equal amount
IV. Errors of commission
(d) Posting a correct amount to a wrong account
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I-(c), II-(a), III-(d), IV-(b)
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I-(b), II-(a), III-(d), IV-(c)
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I-(c), II-(a), III-(b), IV-(d)
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I-(b), II-(a), III-(c), IV-(d)
Explanation
Option C is the correct answer.
Compensating errors
- When a debit item written in credit and credit is written in debit for the same amount.
Error of omission
- An item is completely omitted in recording.
Error of principle
- Revenue item is charged to capital or vice versa.
Error of Commission
- Posting of a correct amount in to a wrong account.
An entry of Rs. 500 was wrongly posted to wages account instead of machinery account, as wages are to be capitalised. It is an error of ________.
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Commission
0%
Omission
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Principle
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Clerical error
Explanation
Error of principle is defined as an accounting error violating the basic principles of accounting. Its a procedural error where amount are correctly recorded but basic principles are avoided. Recording of wages as expenses instead of posting it to machinery account will therefore be termed as error of principle.
An invoice of Rs. 560 is entered in the sales book as Rs.The total of the debit side of the trial balance is Rs. 21,Assuming no other error what is the total of the credit side of the trial balance?
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Rs. 21, 240
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Rs. 21, 350
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Rs. 21, 530
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None of these
Explanation
There are various kinds of error which may occur during the accounting. These are classified as error of omission, error of commission, error of principle and compensating error.
If an amount is written wrongly, its an error of commission. Its a clerical error.
Customer account is debited by Rs.650 instead of Rs.560, hence there will be an excess debit of Rs.90. Therefore the total of credit side of the trial balance should be Rs.21350 (Rs.21440-Rs.90)
Which of the following errors will not cause the trial balance to be out of order?
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Rs. 590 received from P. Das has been debited to (b) Rs. 10 Das
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A purchase of Rs. 258 from Lekhi has been debited to his account as Rs. 285
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The total of the discount column of the cash book (cr.) is Rs. 20 short
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An invoice for Rs. 460 is entered in the sales book as Rs. 640
Explanation
A transaction of rs.460 recorded as Rs.640 in sales day book. This will not impact trial balance as sales is over cast by Rs.180 and the customer account is also over cast by Rs.180.
Therefore, this error will not cause mismatch in trial balance.
Cash sales to Shyam of Rs. 500 not recorded in the books would affect __________.
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Shyam's Account
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Purchase Account
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Sales Account
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Creditors Account
Explanation
When sales to Shyam of Rs. 500 is made for cash, entry to be passed is:
Cash Account Dr.
To Sales account
This leads to error of omission i.e. when any transaction is not recorded in the books of original entry . Such errors do not affect trial balance.
Therefore, when such cash sale transaction is not recorded in the books, it would affect cash and sales account.
Which of the following is an error of commission?
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A sale of Rs. 560 omitted to be recorded.
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A purchase of Rs. 840 posted on the wrong side of account.
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Treating charges as addition to asset.
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A transaction is recorded partially.
Explanation
There are various kinds of error which may occur during the accounting. These are classified as error of omission, error of commission, error of principle and compensating error.
Error of commission is committed due to wrong posting, wrong casting or wrong recording of amounts in the books. Accordingly, recording purchases on the wrong side of the account is an error of commission.
Trial balance is a proof that _____________.
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Every transaction is recorded twice
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No error remains in the books of accounts
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Books are authentically and correctly written
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None of the Above
Explanation
Financial accounting is based on double entry system of accounting. For every debit there will be a credit and vice versa. Trial balance shows the total of debit and total of credit. Its a proof that all transactions are recorded both the sides.
Errors of principle arises when __________.
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Proper distinction is not made between capital and revenue
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There is an omission of transaction
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Wrong amounts are entered in the subsidiary books
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Transactions are entered in the wrong subsidiary books
Explanation
Option A is the correct answer.
Accounting entries are recorded as per the generally accepted accounting principles. If any of these principle are violated or ignored, errors resulting from such violation are known as errors of principle.
An error of principle may occur due to incorrect classification of expenditure or receipt between capital and revenue.
This is very important because it will have an impact on financial statements.
Error of commission does not permit ____________.
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the trial balance to agree
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correct totaling of balance sheet
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correct totaling of trial balance
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None of the above
Explanation
Error of commission is that error in which amounts are incorrectly recorded. For example, a credit sale to Neha for $$Rs.510$$ is recorded in Neha's account as $$Rs.150$$. This may lead to disagreement of trial balance.
Which of the following errors will not cause the trial balance to be out of balance?
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Rs. 310 for goods sold, was posted to the credit of charges.
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Purchases returns book for December 1978 was overcast by Rs. 220.
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Sales book carried forward Rs. 2400 instead of Rs. 2004.
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All of these.
Explanation
1) Instead of sales credited, charges account is credited. Its an error of commission. This will not effect trial balance.
2) Purchase return book is a subsidiary book, hence this will not give any effect in trial balance.
3) Sales book is a subsidiary book which does not effect the trial balance.
Which of the following errors is revealed by trial balance?
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Wrong amount entered in the book of original entry.
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Wrong amount entered in a ledger account.
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Complete omission of an entry from the book of original entry.
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All of the above.
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None of the above.
Explanation
If any wrong amount is entered in the ledger, this will effect the trial balance. In such case, trial balance will not match. Like Rs.450 is entered as Rs.540 in the ledger. This will have disagreement in trial balance by Rs.90.
All such errors can be revealed from trial balance.
Goods worth $$Rs.200$$ returned by Mohan were taken into stock, but no entry was passed, is an error of __________.
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Commission
0%
Principle
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Omission
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Compensatory
Explanation
Error of omission is that error where a specific transaction is completely missed out in recording in the books of accounts. This kind of error does not affect the trial balance.
Goods worth $$Rs.200$$ returned by Mohan is an error of omission.
An entry of $$Rs.320$$ has been debited to Vivek's account as $$Rs.230$$. It is an error of ______________.
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0%
Commission
0%
Omission
0%
Principle
0%
None of the above
Explanation
Error of Commission is that where an amount is wrongly posted. Like instead of amount of $$Rs.450$$ an amount $$Rs.540$$ or instead of $$Rs.1000$$, an amount of $$Rs.100$$ is mentioned.
In the given issue, amount of $$Rs.320$$ is wrongly debited as $$Rs.230$$. This will effect the trial balance by $$Rs.90$$. These errors are called error of commission.
The trial balance _________.
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is a formal financial statement
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is used to prove that there are no errors in the journal or ledger
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provides a listing of every account in the chart of accounts
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provides a listing of the balance of each account in active use
Explanation
The statement in which the debit and credit balances are noted down for each of the account is called a trial balance. Trial balance is prepared to check the arithmetical accuracy of the accounting. There are two main objective of preparation of trial balance:
1) It is a check on the accuracy of posting. If trial balance agrees, this proves that books are arithmetically correct.
2) It brings all ledger balances together at one place.This will help in preparing the profit & loss account and balance sheet.
It was discovered that purchase of typewriter for Rs. 450 was recorded by a debit of Rs. 450 to office equipment account and a debit of Rs.450 to creditors account.The credit column of the trial balance totals Rs.48,100.What should be the total of the Debit column before the correction of this error?
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Rs. 41,100
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Rs. 48,500
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Rs. 47,650
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Rs. 49,000
Explanation
The Balance on the Debit side of the trial balance before making the stated correction would be
Balance on credit Side of Trial Balance 48100
Add: Debit of Office Equipment 450
Add: Debit of Creditors a/c 450
49000
An entry of $$Rs.500$$ was wrongly posted to wages account instead of machinery account, as wages are to be capitalized. It is an error of _________.
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0%
Commission
0%
Ommission
0%
Principle
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Clerical error
Explanation
When a capital expenditure is wrongly debited as revenue expenditure, this is an error of principle. Amount spent on purchasing of machinery including all incidental expenses till the machine is ready for out to use, to be debited to machinery account.
$$Rs.500$$ spent for wages on purchase of machinery wrongly debited to wages account is an error of principle.
Which of the following errors will not cause the trial balance to be out of balance ?
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Purchase Book carried forward Rs.100 less.
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Paid wages Rs. 480 for construction of a room credited to Wages account.
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Purchase return book for march 1979 was under cast by Rs. 35.
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None of the above.
Explanation
The errors mentioned in option A, B and C are one sided errors which may cause the trial balance to be out of order whereas the two errors does not affect the trial balance.
The main purpose of preparing a trial balance is _________.
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To prepare a summary of all the balance
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To compare the debit balance with credit balance
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To locate all types of frauds
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To check the arithmetic accuracy of the ledger accounts
Explanation
Trial Balance is prepared by listing of all ledger balances. The statement in which the debit and credit balances are noted down and finally totaled up to ascertain if they are equal, is called Trial Balance.
The primary object of preparing the trial balance:
1) It is to check the accuracy of posting. If the trial balance agrees it proves that books are arithmetically accurate and both the aspects of all the transactions are correctly recorded.
2) It brings together the balances of all accounts at one place.
Suspense Account is shown in the __________.
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Trading and Profit and Loss Account
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Income and Expenditure Account
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Balance Sheet
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None of the Above
Explanation
There are certain transactions which requires more clarity are temporarily parked in an account which is named as suspense account. If the entries are not clarified before finalizing the books of account, this will be shown in the balance sheet as asset or liability depending upon the nature of balance.
Suresh and Sons, a dealer in machinery, debit machinery account for purchasing machinery on credit. It is an error of ____________.
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0%
Omission
0%
Commission
0%
Principle
0%
Compensation
Explanation
Error of principle are those where a fundamental principle of accounting is not followed while doing the accounting. Like debiting the revenue expenditure as capital expenditure.
In the given case, Suresh & Sons is dealing in the machinery trading, hence amount to be debited to purchase account not to the machinery account.
Omission of Assets or Liabilities can be easily traced with the help of _____________.
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statement of Affairs
0%
profit and loss account
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balance sheet
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none of the above
Explanation
Balance Sheet is prepared by incorporating all the assets and liabilities. Hence if any item of asset or liability is missed out, this can be revealed through balance sheet.
Failure to record completely credit purchases of goods in purchase Journal, it is an error of _____________.
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0%
commission
0%
omission
0%
principle
0%
recording
Explanation
When a complete transaction is missed out in recording in books of account, its an error of omission. In such situation, there will be no effect on trial balance and trial balance will be tallied.
Failure to record the purchase entry completely is an error of omission.
An item of Rs. 38 has been debited to a personal account as Rs.83, it is an error of ______________.
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0%
principle
0%
omission
0%
recording
0%
commission
Explanation
Error of commission is that where an amount is wrongly posted in the ledger. These error will effect the trial balance and trial balance will be out of order. For example Rs.38 is debited as Rs.83. In this case trial balance will be out of order by Rs.45.
Suspense Account is used to rectify those errors which have been located ______________.
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Before preparation of trial balance
0%
After preparation of trial balance
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Before or after preparation of trial balance
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After preparation of final accounts
Explanation
There are certain transactions which requires more clarifications. Till the final clarification, all such items are parked in a temporary account i.e. suspense account.
Once the errors are located, rectification entries are passed through suspense account to make the suspense account zero.
All such errors are errors after preparation of trial balance and hence are rectified by using suspense account.
Posting of wrong amount in the ledger ___________________.
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Causes the trial balance to be out of balance.
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Does not cause the trial balance to be out balance.
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Cause the ledger account to be out of balance.
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None of the above.
Explanation
The posting of wrong amount in the ledger would cause the trial balance to be out of balance.
For Eg : -
Cash received from Debtor is posted in cash account for $$Rs.5100$$ but, in debtors account the amount of receipt is incorrectly posted as $$Rs.5400$$ . Now this would lead to a scenario where the total of the trial balance would be reflecting $$Rs.5400$$ on the credit side but only $$Rs. 5100$$ on the debit side.
Which are the errors which does not affect the trial balance?
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Wrong recording in the original books.
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Error in balancing the account.
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Omission of Casting.
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Forgetting to write cash book balance in the trial balance.
Explanation
If a transaction is not recorded correctly in the original books then it will not affect trial balance as it is two sided error.
Income Tax appears in trial balance ____________ column.
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debit balance
0%
credit balance
0%
L.F.
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none of these
Explanation
Income tax is a payment and expenses. Expense are always debited. Hence Income tax appears in trial balance debit column.
If the trial balance shows a short credit the suspense account will have a ________ balance.
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debit
0%
zero
0%
credit
0%
none of these
Explanation
Trial Balance is prepared by taking the balances of all ledger account. Trial balance is prepared to check the arithmetical accuracy. If the total of debit and credit are tallied, it is proved that the books are arithmetically accurate.
In case of any error, rectification entries are to be passed. One of the methods of rectification of error involves use of suspense account.
When the trial balance shows a short credit, suspense account will be used for the short amount to tally the trail balance and hence, it will have a credit balance to make the total equal.
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