MCQExams
0:0:1
CBSE
JEE
NTSE
NEET
Practice
Homework
×
CBSE Questions for Class 11 Commerce Accountancy Trial Balance And Rectification Of Errors Quiz 16 - MCQExams.com
CBSE
Class 11 Commerce Accountancy
Trial Balance And Rectification Of Errors
Quiz 16
A folio in the purchases journal was added as Rs $$34,680$$, instead of Rs$$36,480$$. Identify the amount of the trial balance difference which will be placed in a suspense account.
Report Question
0%
Cr. $$1,800$$
0%
Dr. $$1,800$$
0%
Dr. $$3,640$$
0%
Cr. $$3,640$$
Explanation
Difference :
36
,
480
−
34
,
680
=
1
,
800
its an error of commission.
36,480−34,680=1,800
Amount of purchase is short by Rs
1
,
800
1,800
. As purchase has debit balance and it comes on the debit side of trial balance, the trial balance must be short by Rs
1
,
800
1,800
on the debit side.
An expense on major repairs of machinery purchased second hand has been debited to repairs account; it involves an error of _________.
Report Question
0%
Error of omission
0%
Error of commission
0%
Error of principle
0%
Compensating error
Explanation
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
Sales book was overcast by Rs$$20,000$$. If this error located after preparation of trial then which of the following rectification entry is correct?
Report Question
0%
Suspense A/c Dr. $$20,000$$
To Sales A/c $$20,000$$
0%
Sales A/c Dr. $$20,000$$
To Suspense A/c $$20,000$$
0%
Profit & Loss Adj.A/c Dr. $$20,000$$
To Sales A/c $$20,000$$
0%
Sales A/c Dr. $$20,000$$
To Profit & Loss Adj. A/c $$20,000$$
Explanation
Overcasting of sales book will results a higher profit. Its an error of commission. If the error is located after the trial balance, following rectification entry need to be passed:
Sales A/c Dr. 20000
To Suspense A/c 20000
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?
Report Question
0%
A's account only
0%
Sales account only
0%
Purchase returns account and Sales account
0%
Purchases account only
Explanation
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.
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:
Report Question
0%
Debit Vehicle maintenance account and credit Motor Vehicles account
0%
Debit Cash account and credit Motor vehicles account
0%
Debit Vehicle maintenance account and credit Cash account
0%
Debit Motor vehicles account and credit Vehicle maintenance account
Explanation
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
If purchase amounting to Rs. 12,000 posted as Rs. 2,000 and sales amounting to Rs. 12,000 posted as Rs. 2,000 then it will be classified as ___________.
Report Question
0%
Errors of complete omission
0%
Compensating errors
0%
Errors of partial omission
0%
Errors of principle
Explanation
Compensating error is one that offsets another accounting error.
An error that cancels another error and which does not affect the overall balance.
In the given case, errors are being made and nothing is omitted neither there is an error of principle, these errors are cancelling each other and giving a nil effect and the effect of this error is not affecting the total balance.
_______ arise because of the failure to differentiate between capital expenditure and revenue expenditure and capital receipts and revenue receipts.
Report Question
0%
Errors of partial omission
0%
Errors of complete omission
0%
Errors of principle
0%
Compensating errors
Explanation
Accounting entries are recorded as per the generally accepted accounting principles. If any of these principles 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. It may lead to under/over stating of income or assets or liabilities, etc. These errors do not affect the trial balance.
If the trial balance do not agree after transferring the balance of ledger accounts including cash and bank balance and also errors are not located timely, then the trial balance is tallied by transferring the difference of debit and credit side to an account known as -
Report Question
0%
Memorandum Account
0%
Capital Account
0%
Suspense Account
0%
Drawing Account
Explanation
Trial balance is prepared to check and confirm the posting of all accounting entries. Trial balance is prepared with the help of ledger account. All the balances from each of ledger account is taken in a list in the debit and credit column. Both the sides of trial balance must be equal as accounting is based on the double entry system of accounting.
If the trial balance do not agree and errors not located before the finalization of accounts, the difference amount has to be transferred to suspense account.
State with reasons whether the following statement is true or false:
Rectification of errors are necessary to tally the trial balance.
Report Question
0%
True
0%
False
Explanation
There is no need to rectify the error in order to tally the trial balance. Trial balance can be tallied by debiting or crediting the difference amount to the suspense account.
A sold goods of 500/- to Z which is entered in purchase book as 5,What will be the entry after rectification?
Report Question
0%
Z's A/c Dr. 5,500
To Purchase A/c 5,000
To Sales A/c 500
0%
Z's A/c Dr. 5,500
To A 5,500
0%
Purchase A/c Dr. 4,500
To A 4,500
0%
Z's A/c Dr. 5,500
To SA/cs 5,500
Explanation
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
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.
Report Question
0%
Debit side short by Rs$$9,100$$
0%
Credit side short by Rs$$9,100$$
0%
Debit side more by Rs$$7,900$$
0%
Credit side more by Rs$$6,100$$
Explanation
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.
Which of the following account(s) will be affected, while rectifying the error of an amount Rs.$$200$$ received from Mr. "P" wrongly credited to Mr. "Q" s account?
Report Question
0%
Only Cash Account
0%
Only P's Account
0%
Only Q's Account
0%
Both of Mr.P's & Mr.Q's Account
Explanation
This is an error of commission. Instead of crediting the account of Mr. P, account of Mr. Q is credited. Hence while rectification, the account of Mr. P and Mr. Q will be affected. Following rectification entry will be passed:
Mr. Q A/c Dr. 200
To Mr. P A/c 200
Goods bought from Mukesh amounting to Rs. 5,500 were posted to the credit of his account as Rs. 5,If this error located after preparation of trial balance then which of the following rectification entry is correct?
Report Question
0%
Suspense A/c Dr. 500
To Mukesh A/c 500
0%
Mukesh A/c Dr. 500
To Suspense A/c 500
0%
Profit & Lass Adj. A/c Dr. 500
To Mukesh A/c 500
0%
Mukesh A/c Dr. 500
To Profit & Loss Adj. A/c 500
Explanation
If any error is found after the preparation of trial balance, no change can be made in the books of accounts. So, a suspense account is prepared to rectify posting errors, the balance of which is transferred to the trial balance and due to which the trial balance tallies.
In the case original entry should be
Purchases A/c. Dr. 5500
To Mukesh A/c 5500
Instead of 5500, an amount of 5000 was credited to Mukesh's account. This implies Rs. 500 should be credited to Mukesh.
Rectified entry will be
Suspense a/c dr. 500
To Mukesh a/c 500
Errors of Principle do not allow:
Report Question
0%
Correct totalling of the Balance Sheet
0%
Correct totalling of the Trial Balance
0%
The Trail Balance to agree
0%
None of these
Explanation
Error of principle is the violation to the basic principles of accounting. In this distinction between capital and revenue items is not made.
In this situation, the trial balance agrees and there is no error in the totaling of balance sheet or trial balance. This is because, here error is only in method of solving while transactions and amounts are recorded in the right way.
Which of the following errors will affect the Trial Balance ?
Report Question
0%
Errors of complete omission
0%
Errors of recording in the book of original entry
0%
Errors of posting involving the posting to wrong account
0%
Correct recording in the cash book but not posted in the ledger at all
Explanation
Transactions are recorded first in cash book and journal and then posted to ledger and the balances of the ledger accounts is transferred to the trial balance. In between this some entries might be recorded in one account but omitted in another, in this case the trial balance will not tally.
For example, for cash sales cash book is debited while sales account is omitted to be credited, this will lead to difference in the balances. This balance is transferred to trial balance which does not tallies.
A debit balance $$(Rs.5000)$$ of Ram, a debtors entered as a credit Balance of $$Rs.500$$ in the trial balance :
Report Question
0%
Rectifying entry is not requires to be passed
0%
Rectifying entry is required to be passed and posted is required in all the affected accounts.
0%
Rectifying entry is required to passed but no posting in the ledger required in case of Ram
0%
None of the above
Explanation
When a debit balance is wrongly posted as credit balance in the trial balance, the trial balance will not tally and there's need for passing a rectifying entry.
In the case, debtor's account is correct and the balance calculated is correct, error is in the wrong posting to the credit side of the trial balance. Hence, rectifying entry will be passed but there would be no change in debtor's(Ram) account.
Which of the following error will affect the Trial Balance ?
Report Question
0%
Wrong recording in purchase Book and posted accordingly
0%
Wrong recording in Journal proper but not posted at all
0%
Correct recording in Sale Book but not posted
0%
Errors of posting involving the posting to wrong account on correct side with correct amount
Explanation
All the transactions recorded under double entry system of accounting has a dual effect i.e., its effect can be seen on two accounts, so if the transaction is posted in one account and omitted to be posted in the other account, the balances of which is transferred to the trial balance thereby causing disagreement in the trial balance.
For example, if credit sale is recorded in the sales book and omitted to be posted in debtor's account there will be disparity between the balances.
The main object of opening suspense account is __________ .
Report Question
0%
To tally the trial balance
0%
To avoid the delay in the preparation of financial statements
0%
To rectify the errors
0%
None of these
Explanation
Trial balance is prepared to check the accuracy of the original books of accounts. It helps in preparing the final accounts without any error. Rectifying error after preparing final accounts can take a lot of time and labour. When there is error in the trial balance, a suspense account is created to rectify the error and help in the preparation of final accounts more easily and without delay.
Which of the following errors will not affect the Trial Balance ?
Report Question
0%
Omission of an count from Trial Balance
0%
Entering the balance of an account in the wrong amount column at the trial Balance
0%
Wrong Totalling of the trial balancing
0%
Wrong recording in the journal proper but not posted at all
Explanation
Trial balance is prepared from the balances of the ledger accounts and ledger is prepared from journal entries. If a transaction is wrongly recorded in journal and posted to the ledger account, then the trial balance will not tally. But, if the journal is wrong and is not posted at all, this means no debit or credit effect on the accounts. Hence there will be no effect on the trial balance.
Which of the following errors is an error of Principle?
Report Question
0%
$$Rs.600$$ received from Ganpat has been debited to his account
0%
Purchase of $$Rs.2,000$$ has been entered in the sales journal
0%
Repairs to building have been debited to Building Account
0%
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.
In the case repairs to building is a revenue expenditure whereas building account refers to capital expenditure spent on acquiring the building. Repairs is revenue expense and is deducted from the profit and loss account of the year.
Errors of commission do not allow:
Report Question
0%
Correct totalling of the Balance Sheet
0%
Correct totalling of the Trial Balance
0%
The Trial Balance to agree
0%
None of these
Explanation
Errors due to wrong posting of amount or posting to the wrong account, wrong recording of amount in books of original entry is known as error of commission. When a wrong amount is posted in ledger or in subsidiary books, the total of the account will be wrong affecting the balance of that account. This balance is transferred to the trial balance, which does not tallies.
Good costing Rs.10,000 given charity were not recorded. The error will result in :
Report Question
0%
Is an error of Commission
0%
Will affect the Trial Balnce
0%
Will not affect the Net Profit
0%
None of these
Explanation
When goods given as charity is not recorded in the books, this is known as error of omission. Error of omission is when a transaction is not recorded in the books at all, or recorded in journal but not posted in ledger accounts. Here both debit and credit aspect of the transaction is missing, thus is does not have any impact on the agreement of the trial balance.
When this transaction is not recorded in the books, it affects the net profit of the year. This is because, the amount of goods given as charity is deducted from the purchases account balance which is shown in the trading account. Increase in purchase account balance decreases the gross profit which is transferred to profit and loss account to calculate net profit which also decreases.
Goods costing Rs.10,000 given as charity were not recorded. The errors will result in :
Report Question
0%
Increases in Net Profit
0%
Decreases in Net Profit
0%
No Effect on Net Profit
0%
None of these
Explanation
Gross profit from the trading account is transferred to the profit and loss account to calculate net profit. In the trading account When purchases account balance is more, gross profit is less and vice versa.
Journal entry for goods given as charity is -
Charity A/c Dr 10000
To Purchases A/c 10000
This implies purchases account balance is reduced, but if the transaction is not recorded, the purchase account will show increased balance leading to lesser gross profit and simultaneously net profit will decrease.
Goods costing Rs.10,000 destroyed by fire were not recorded. the error will result in
Report Question
0%
Increase in Gross Profit
0%
Decrease in Gross Profit
0%
No effect on Gross Profit
0%
Either c(a) or (b)
Explanation
Gross profit is calculated from the trading account. It is the difference between sales, closing stock and purchases,direct expenses. Any increase in the balance of purchases account results in decrease in the value of gross profit.
When goods are destroyed by fire, the value of the purchase account decreases. The journal for this transaction is -
Loss by fire A/c Dr 10000
To Purchases A/c 10000
Let us assume the entry is not recorded in the books, total of credit side of trading account is 500000 and debit side (including purchases) is 120000, the gross profit will be 380000.
When the entry is recorded in the books, purchases account balance will reduce by 10000, the gross profit the calculated will be (500000-110000) 390000. Thus when entry of loss by fire is not recorded, the gross profit decreases.
Goods costing Rs.10,000 distributed as free sample were not recorded. The error will result in
Report Question
0%
is an error of Commission
0%
Will affect the Trial Balance
0%
will not effect the Net Profit
0%
None of these
Explanation
When any transaction is not recorded in the books, it is known as error of omission. Error of omission is when any transaction is not recorded in the books at all, or recorded in journal but omitted in ledger accounts. Here both debit and credit entry is missing, and thus this transaction has no effect on the trial balance.
Here the amount of goods distributed is deducted from the purchases account balance because goods are going out of the business.
This will affect the net profit because increase or decrease in value of purchase account balance affects the gross profit, which in turn affects the net profit.
Good Costing Rs.10,000 destroyed by fire were not recorded. The error will result in :
Report Question
0%
is an error of Commission
0%
will affect the Trail Balance
0%
will not affect the net profit
0%
None of these
Explanation
When goods are destroyed by fire and the transaction is not recorded, this is known as error of omission. Error of omission is when a transaction is not recorded in the books at all, or recorded in journal but not posted in the ledger accounts. Since transaction is not recorded at all, the effect is one debit as well as credit side. This implies trial balance will not be affected because both debit and credit aspect of the entry is missing.
The omission of the transaction affects the net profit. This is because, the entry for goods lost on fire affects the purchases account balance, and purchases account is incuded in trading account for calculating gross profit which is affected by any increase or decrease in the value of purchases account. The gross profit is transferred to profit and loss account for calculation of net profit.
Goods costing Rs.10,000 destroy by fire were not recorded.The error will result in :
Report Question
0%
Increase in Net Profit
0%
Decrease in Net Profit
0%
No effect on Net Profit
0%
None of these
Explanation
Net profit is calculated from gross profit and any increase or decrease in value of gross profit leads to simultaneous increase or decrease in value of net profit. Increase in purchase account balance leads to fall in gross profit and vice versa.
When goods are destroyed by fire, the purchases account balance decreases, when the transaction is recorded. When the transaction is not recorded, the purchase account balance remains more which should actually be less, leading to fall in gross profit. This profit is then transferred to profit and loss account to calculate net profit, which eventually decreases.
Goods costing Rs. 10,000 taken by the proprietor for personal use were not recorded. The errors will result in :
Report Question
0%
Increase in Gross Profit
0%
Decrease in Gross Profit
0%
Non effect on Gross Profit
0%
Either (a) or (b)
Explanation
When goods are withdrawn by proprietor, the journal entry passed is -
Drawings A/c Dr 10000
To Purchases A/c 10000
If this entry is not recorded in the books, the gross profit will decrease. Gross profit is calculated from the trading account, it is the difference between sales, closing stock and purchases, direct expenses. When the entry of drawing is not recorded the purchase account will show more debit balance, leading to decrease in the gross profit.
For example lets assume the transaction related to drawing of goods is not recorded and sales= 500000, closing stock= 50000, purchases=100000 and direct expenses= 20000. the gross profit here is 430000. This is when drawings is not deducted from the purchases.
After deducting the amount of goods withdrawn from purchases (100000-10000), the new gross profit is (550000 - 110000) 440000. This implies error of omission of entry of goods withdrawn reduces the gross profit.
Goods costing Rs.10,000 distributed as free samples were not recorded. The error will result in
Report Question
0%
Increase in Gross profit
0%
Decrease in Gross Profit
0%
No effect on Gross Profit
0%
Either (a) or (b)
Explanation
Gross profit is calculated from the trading account. It is the difference between sales, closing stock and purchases, direct expenses. Increase in the value of purchases or direct expenses leads to decrease in gross profit.
When goods are distributed as free samples, the journal ent
ry is-
Advertisement A/c Dr 10000
To Purchases A/c 10000
This 10000 is credited to the purchases account ledger. The debit balance of the purchase account is transferred to the trading account. When the entry is not recorded i.e., amount of goods distributed as free samples is not deducted from the purchase account, the balance of the purchase account is more and the gross profit calculated is decreased.
Goods costing Rs.10,000 taken by the proprietor for personal use were not recorded. This errors will result in :-
Report Question
0%
Increase in Net Profit
0%
Decreases in Net Profit
0%
No Effect on Net Profit
0%
None of these
Explanation
Net profit is calculated from the gross profit transferred from the trading account to the profit and loss account. An increase or decrease in the value of gross profit directly affects the net profit.
When the proprietor withdraws goods, the journal entry passed is -
Drawings A/c Dr 10000
To Purchase A/c 10000
This amount is reduced from the purchases account balance. when this amount is not reduced i.e., the transaction is not recorded, the purchases account balance increases leading to less gross profit and this gross profit is transferred to the profit and loss account to calculate net profit, which eventually decreases.
0:0:1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
0
Answered
0
Not Answered
0
Not Visited
Correct : 0
Incorrect : 0
Report Question
×
What's an issue?
Question is wrong
Answer is wrong
Other Reason
Want to elaborate a bit more? (optional)
Practice Class 11 Commerce Accountancy Quiz Questions and Answers
<
>
Support mcqexams.com by disabling your adblocker.
×
Please disable the adBlock and continue.
Thank you.
Reload page
