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CBSE Questions for Class 11 Commerce Accountancy Trial Balance And Rectification Of Errors Quiz 6 - MCQExams.com
CBSE
Class 11 Commerce Accountancy
Trial Balance And Rectification Of Errors
Quiz 6
On rectification of this error suspense A/c will be....
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Debited by Rs.1,800
0%
Credited by Rs.2,000
0%
Debited by Rs.2,200
0%
Credited by Rs.400
Suspense Account in the trial balance will be entered in the _________.
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manufacturing A/c
0%
trading A/c
0%
profit & loss A/c
0%
balance sheet
Explanation
There are certain transactions which requires more clarity or there are some errors which are not rectified before the finalization of accounts. All such entries are parked in a temporary account known as suspense account.
Suspense account will be shown in the balance sheet either on asset side or liabilities side, depending on the balance of suspense account.
Which of the following errors is an error of commission?
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Sales of Rs. 1,000 was recorded in the purchase journal.
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Salary paid to Mohan and Vikas have been debited to their personal accounts.
0%
The total of sales journal has not been posted to the sales account.
0%
Repairs to building have been debited to building account.
Explanation
Option D is correct answer.
Error of commission is that when there is an error in posting of an amount or there is an error in posting in the correct account.
Here repairs to building have been debited to building account which is an error of posting in wrong account.
Rs.1500 received from sub-tenant for rent, entered correctly in the cash book and posted to the debit of the rent account. In the trial balance ____________.
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the debit total will be greater by Rs. $$3,000$$ than the credit total
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the debit total will be greater by Rs. $$1,500$$ than the credit total
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subject to other entries being correct, the total will agree
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none of the above
Explanation
Correct accounting entry will be as under:
Cash A/c Dr.
1500
1500
To Rent A/c 1500
Instead of crediting the Rent account by Rs.1500, it is wrongly debited by Rs.1500. Hence there will be a double affect.
In such case, the total of debit will be greater by Rs.3000 than the credit total.
Errors which affect only one account can be __________.
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0%
Errors of complete omission
0%
Errors of principle
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Errors of posting
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None of the above
If the closing stock at the end of the year is overstated by Rs.7,500, the error cause an_______________________.
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Overstatement of cost of goods sold for the year by Rs. 7,500
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Understatement of gross profit for the year by Rs. 7,500
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Overstatement of net income for the year by Rs. 7,500
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Understatement of net income for the year by Rs. 7,500
Explanation
If the closing stock at the end of the year is overstated by RS-7,500, the error cause an overstatement of net income for the year by RS-7,500. Overstatement of closing stock reduces the value of cost of goods sold thereby increasing the profit.
State whether True or False:
Errors of principle will affect Trial Balance.
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True
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False
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 violations 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 very under/overstating of income or assets or liabilities, etc. For example, the amount spent on additions to the buildings should be treated as capital expenditure and must be debited to the asset account. Instead, if this amount is debited to the maintenance and repairs account, it has been treated as a revenue expense. This is an error of principle. Similarly, if a credit purchase of machinery is recorded in the purchases book instead of the journal proper or rent paid to the landlord is recorded in the cash book as payment to the landlord, these are errors of principle. These errors do not affect the trial balance.
State whether True or False:
If the amount is posted in the wrong account or it is written on the wrong side of an account, it is called Error of commission.
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True
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False
Explanation
Option A is correct.
Errors of commission are the errors which are committed due to wrong posting of transactions, wrong totaling or balancing of the accounts, wrong casting of the subsidiary books, or wrong recording of amount in the books of original entry, etc.
For example: Raj Hans Traders paid Rs. 25,000 to Preetpal Traders (a supplier of goods)). This transaction was correctly recorded in the cash book. But while posting to the ledger, Preetpal's account was debited by Rs. 2,500 only. This constitutes an error of commission. Such an error by definition is of clerical nature and most of the errors of commission affect in the trial balance.
Error of omission arises when ___________.
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any transaction is left to be recorded
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any transaction is recorded in a fundamentally incorrect manner
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any transaction is incorrectly recorded, either wholly or partially
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none of the above takes place
Explanation
Error of omission means when something is omitted to be recorded either wholly or partially and affects the Trial Balance.
When a particular transaction is completely not recorded it is known as complete omission whereas a situation where a transaction is partially recorded it is known as partial omission as the complete transaction is not recorded in books.
Sales to Ram, Rs.336, posted to his account as Rs.363 will affect _____________.
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Sales account
0%
Ram's
account
0%
Cash
account
0%
all
of the above
Explanation
As Ram account is debited with 363 instead of 336 which will result in affecting his account.
Goods worth Rs.24,000 were returned by X. The accountant, however, credited the sales returns account by Rs.42,In order to rectify this error, what should be done?
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Debit the sales return account by Rs.42,000.
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Credit the sales return account by Rs.24,000.
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Debit the sales return account by Rs.66,000.
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Debit the sales return account by Rs.18,000.
Explanation
Correct entry for the given transaction:
Sales Return A/c Dr....$$Rs.24,000$$
To Mr. X A/c....$$Rs.24,000$$
Sales Return has been credited by $$Rs.42,000$$ instead of debiting by $$Rs.24,000$$.
We now need to pass an entry in such a way that a correct effect is seen on the debit side at $$Rs.24,000$$
This can be done if the account is debited by $$Rs.66,000$$. By doing this the effect of incorrect credit will be gone and required $$Rs.24,000$$ will be reflected on debit side.
In case of trial balance does not agree, the difference is put to _________.
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suspense A/c
0%
drawing A/c
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capital A/c
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trading A/c
Explanation
The difference amount will be transferred to Suspense Account because the difference in a Trial Balance when located will be debited or credited to Suspense Account Which ultimately should become nil.
Therefore, A is the correct option.
Which of the following errors will not affect the trial balance?
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Goods for 300 purchased on cash, expenses account was debited instead of purchases account.
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Purchase Returns Book for December was overcast by 200.
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Sales book carried forward 2,200 instead of 2,000
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None of the above
Explanation
Goods for 300 purchased on cash, expenses account was debited instead of purchase account, this is a type of compensating error and and these errors do not affect the trial balance.
Purchased goods from Mohan for Rs. 3,600 but was recorded as Rs. 6,300 to the debit of Mohan. In the rectifying entry, Mohan's A/c will be credited with ________________.
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0%
9,900
0%
2,700
0%
3,600
0%
6,300
Preparation of Trial Balance helps, mainly in ________.
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summarising business transactions
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verifying the 'generally accepted accounting principles' have been observed
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finalising the 'sources and uses of funds' statement
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locating errors, if any, in books of accounts
Explanation
Trial balance is prepared at the end of the financial year to check the accuracy of the books of account. If trial balance agrees, this can be assume that the books of account are arithmetical correct. But there are other types of errors which are there even the trial balance is tally.
Preparation of trial balance helps in locating the following error:
Compensating error
Error ofomission
Error of principle
If Trial Balance shows excess credit, suspense account will show a debit balance.
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True
0%
False
Explanation
If the trial balance shows excess credit, suspense account will show a debit. As a suspense account is
created temporarily when the account for the transaction cannot be determined at the time when transaction was recorded. It is basically an account where all the unclassified transactions are recorded
An accountant forgot to enter a sales entry in the subsidiary register the impact will be _________.
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trial balance will not be affected
0%
trial balance will be affected
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debit side of the trial balance will be enhanced
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credit side of the trial balance will be enhanced
Explanation
Recording of sales transaction in subsidiary books is an example of complete omission. Its an error of omission. Since both the sides are not recorded, hence trial balance will not be affected.
If a purchase return of Rs.
1,000 has been wrongly posted to the debit of the sales returns account, but has been correctly entered in the suppliers account, the total of the _________________.
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Trial balance would show the debit side to be
Rs.
1,000 more than the credit.
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Trial balance would show the credit side to be
Rs.
1,000 more than the debit.
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Debit side of the trial balance will be
Rs.
2,000 more than the credit side.
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Credit side of the trial balance will be
Rs.
2,000 more than the debit side.
Explanation
This error will give the double affect as instead of credit of $$Rs.1000$$ for purchase return, a debit of $$Rs.1000$$ is posted to sales return a/c.
Due to this, debit of trial balance will be $$Rs.2000$$ more than the credit side.
Trial balance is a conclusive proof of accuracy of accounts.
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True
0%
False
Explanation
False. Trial balance is not a conclusive proof of accuracy of accounts as the trial balance might tally in cases where there are compensating errors. Hence, it does not justify that the accounts are free from any frauds or errors.
Errors of carry forward from one year to another year affect _____________.
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Personal A/c
0%
Real A/c
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Nominal A/c
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Both A and B
Explanation
Errors in nominal account affect the profitability of the business hence all such errors ideally to be located and rectified within the same financial year. If errors are not located and carried forward to the subsequent year, these need to be rectified through profit & loss adjustment account.
Errors of personal account and real account need to be rectified in the subsequent year through suspense account.
In case, a trial balance does not agree, the difference is put to ___________.
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0%
Suspense a/c
0%
Drawings a/c
0%
Capital a/c
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Trading a/c
Explanation
If trial balance does not agree, the difference amount is parked in a temporary account known as "suspense a/c" All rectification entries are passed through suspense account.
Error of omission arises when_________________.
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any transaction is left to be recorded.
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any transaction is recorded in a fundamentally incorrect manner.
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any transaction is incorrectly recorded, either wholly or partially.
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none of the above
Explanation
Omission means to leave out or exclude. Hence, error of omission arises when any transaction is left to be recorded.
Trial balance is an account.
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True
0%
False
Explanation
False. Trial balance is not an account its a statement. It is a statement which lists the balances of all the ledger accounts.
The most difficult type of misstatement to detect fraud is based on.
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Related party purchases
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Related party sales
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The restatement of sales
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Omission of a sales transaction from being recorded
Explanation
Option D is correct.
The most difficult type of misstatement to detect fraud is based on omission of a sales transaction from being recorded.
Omission is completely/partially not recording a transaction. When a transaction has a error and the trial balance might not tally which might help in identifying if there is any error.
But in case of omission the trial balance will tally regardless, hence, its difficult to find out such errors.
The preparation of a trial balance helps in locating _________.
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0%
Compensating errors
0%
Error of omission
0%
Error of Principle
0%
All of the above
Explanation
Trial balance is prepared at the end of the financial year to check the accuracy of the books of account. If trial balance agrees, this can be assume that the books of account are arithmetical correct. But there are other types of errors which are there even the trial balance tally.
Preparation of trial balance helps in locating the following error:
Compensating error
Error ofomission
Error of principle
'Goods sent on approval basis' have been recorded as 'Credit sales'. This is an example of ______________.
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error of principle
0%
error of commission
0%
error of omission
0%
error of duplication
Explanation
Goods sent on approval is not an actual sales hence not to be recorded as sales. This has to be recorded as sale on approval basis, once the confirmation is received for actual sales, than only it has to be considered as credit sale.
Its an error of principle.
Match List I with List II and select the correct answer using the codes given below:
List I
List II
A. Error of Omission
Capital expenditure treated as revenue
B. Error of Commission
Goods sold but not entered in books
C. Error of Principle
A's A/c is debited by $$Rs. 500$$, instead of $$Rs. 5000$$
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$$A = 1, B = 2, C = 3$$
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$$A = 2, B = 3, C = 1$$
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$$A = 3, B = 2, C = 1$$
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$$A = 2, B = 1, C = 3$$
Explanation
List I
List II
A. Error of Omission
2. Goods sold but not entered in books
B. Error of Commission
3. A's A/c is debited by
R
s
.
500
Rs.500
, instead of
R
s
.
5000
C. Error of Principle
1. Capital expenditure treated as revenue
$$Rs. 331$$ received from Mr. X is debited to his account as $$Rs. 313$$. The rectifying journal will be:
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Suspense A/c Dr. $$Rs. 331$$
To X $$331$$
0%
X Dr. $$Rs. 313$$
To Suspense A/c $$Rs. 313$$
0%
Suspense A/c Dr. $$Rs. 644$$
To X $$Rs. 644$$
0%
Suspense A/c Dr. $$Rs. 18$$
To X $$Rs. 18$$
Explanation
Mr. X a/c has to be given a credit of Rs.331 on account of payment received but instead an amount of Rs.313 is debited to his account. The total difference amount becomes Rs.644 (Rs.331+Rs.313).
Following will be the rectification entry:
Suspense A/c Dr. 644
To Mr. X 644
Purchase of office furniture worth $$Rs. 2500$$ has been debited to general expense account. It is ___________.
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0%
an error of omission
0%
a clerical error
0%
an error of principle
0%
a compensating error
Explanation
Purchase of office furniture has to be debited to furniture account as its an asset. This has been debited as general expenses. Its an error of principle as capital expenditure is debited as revenue expenditure.
Rectification entry will be as under:
Furniture A/c Dr. 2500
To General Expenses 2500
Balance appearing on the credit side of the trial balance is _________.
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0%
a gain
0%
a revenue
0%
a liability
0%
all of these
Explanation
There are certain rules for the different type of account i.e personal a/c, real a/c and nominal a/c. On the basis of these rules, all expenses, losses and assets are debited and all revenue, gains and liabilities are to be credited.
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Practice Class 11 Commerce Accountancy Quiz Questions and Answers
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