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CBSE Questions for Class 11 Commerce Accountancy Trial Balance And Rectification Of Errors Quiz 7 - MCQExams.com
CBSE
Class 11 Commerce Accountancy
Trial Balance And Rectification Of Errors
Quiz 7
Legal expenses paid to Mohan is debited to his personal account. This is an example of error _________.
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0%
duplication
0%
omission
0%
commission
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principle
Explanation
Legal expenses paid to Mohan need to be debited to legal expenses account not to the personal account. It is an error of commission.
Rectification entry has to be passed as:
Legal Expenses A/c Dr.
To Mohan A/c
$$Rs. 5,000$$ spent on repairing of Second-hand Machinery purchased is transferred to Repairs A/c. It is an error of __________.
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0%
omission
0%
commission
0%
principle
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none of these
Explanation
Amount of $$Rs.5000$$ spent on repairing of second hand machinery purchased. This amount is spent to improve the efficiency of the asset purchased and hence needs to be debited to the respective asset account.
Therefore, in the given case it is an error of principle as capital expenditure is debited as revenue expenditure.
Rectification will be passed as under:
Machinery A/c Dr. $$5,000$$
To Repairs A/c $$5,000$$
Which of the following is the objective of trial balance?
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To ascertain the geometrical accuracy of the ledger accounts.
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To help in locating errors.
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To help in the preparation of the accounting report.
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None of the above
Explanation
The trial balance is prepared to fulfill the following objectives:
1. To ascertain the arithmetical accuracy of the ledger accounts.
2. To help in locating errors.
3. To help in the preparation of the financial statements.
_________ are the errors committed by persons responsible for recording and maintaining accounts of a business firm in the course of accounting process.
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Marketing error
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Accounting errors
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Planning error
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All of the above
Explanation
Errors are those which are happened while recording the transaction in the books of account unintentionally. As recording of transactions are done by the junior accountant, there are chances of having the errors. Errors in accounting are classified as:
1) Error of principle
2) Error of Omission
3) Error of Commission
4) Compensating error
A mistake in the casting of subsidiary books is __________.
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Errors of commission
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Errors of principle
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Compensating errors
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Errors of omission
Explanation
Error of commission is that where the amount is wrongly posted or amount is posted in a wrong account. Mistake in the casting of subsidiary books is also an error of commission. For example, sales day book total is carried forward as Rs.45600 instead of Rs.46500. It is an under casting of sales day book.
Unintentional omission or commission of amounts and accounts in the process of recording transactions are known as __________.
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0%
misinterpretation
0%
frauds
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errors
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none of the above
Explanation
Errors are those which are happened while recording the transaction in the books of account unintentionally. As recording of transactions are done by the junior accountant, there are chances of having the errors. Errors in accounting are classified as:
1) Error of principle
2) Error of Omission
3) Error of Commission
4) Compensating error
If accountant does not post the journal entry in journal, it will be classified as __________.
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0%
error of principle
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error of commission
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compensating errors
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error of complete omission
Explanation
When a complete accounting transaction is missed out in recording , it is an example of error of complete omission. For example, sales of $$Rs.6500$$ on credit to Ram is not at all recorded in the books of account. It is an error of complete omission. There will be no affect on trial balance due to such error.
Compensating errors do not affect the agreement of __________.
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0%
trial balance
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cash flow statement
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fund flow statement
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none of the above
Explanation
When an error is compensated by another error by nullify the amount of difference, it is said to be a compensating error. Due to these error, there will no affect on trial balance.
_________ are neutralizing in nature, hence one error is compensated by other error or errors of opposite nature.
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0%
Errors of principle
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Complete omissions
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Compensating errors
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Errors of commission
Explanation
When one error of accounting is compensated by the other error, these are called compensating error. Compensating error nullify the affect and trial balance will not have any disagreement.
For example, an amount of Rs.1000 received from Ram is credited to his account as Rs.100 on the other hand, an amount of Rs.1000 paid to Sunil is debited to his account as Rs.100. A short credit of Rs.900 in Ram's a/c is neutralized by a short debit to Sunil's a/c.
_________ arise as a result of some act of omission on the part of the person responsible for the maintenance of books of account.
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Errors of commission
0%
Errors of omission
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Compensating errors
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Errors of principle
Explanation
When a particular accounting transaction is omitted to be recorded in the books of account, this is an error of omission. This kind of error are clerical error and happened due to negligence of the person responsible for accounting. Error of omission may be due to partial omission and complete error.
Errors other than __________ are called clerical errors.
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0%
Errors of Principle
0%
Partial Omission
0%
Complete Omission
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None of these
Explanation
Errors can be classified as:
1) Error of principle
2) Error of omission
3) Error of Commission
4) Compensating error
Error of principle is that when the basic rule of accounting is violated. In such case, there will be no difference in trial balance. This is an error of concept and not a clerical error.
All other errors are classified as clerical error.
An agreement of the trial balance does not prove that __________________.
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all transactions have been correctly analyzed and recorded in the proper accounts
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all transactions have been recorded in the books of original entry
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both (A) & (B)
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none of above
Explanation
Agreement of trial balance just proves that the proper posting of recorded transaction is done and books of account are arithmetically correct. But it does not prove that all transactions are correctly analyzed as there are chances of other kind of errors like error of principle or error of complete omission. In such situation, trial balance will not be affected but the errors are prevailing in the books of account.
Which of the following will disturb the balancing of the trial balance?
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Entering an acquisition of an asset, on credit terms, in the purchases day book.
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Posting to an asset account instead of an expenditure account.
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Entering a wrong amount in a book of prime entry.
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Error in adding up a book of prime entry.
Explanation
Trial balance will disagree when there is a one sided error. If any error is done in adding up a book of prime entry, trial balance will not be tallied.
In the first three cases, these are double sided error, hence there will be no affect on trial balance.
Accounting Errors can be classified into ______________.
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Errors of Principle
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Clerical Errors
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Both (A) & (B)
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None of the Above
Explanation
Accounting errors are classified as:
1) Error of Principle
2) Error of commission
3) Error of Omission
4) Compensating error
Other than error of principle, all the above errors are considered as clerical errors. Error of principle is that where the fundamental rules of accounting are not followed.
Indicate which of the following errors will cause the trial balance to be out of balance?
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A debit to an incorrect expense account.
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A credit to an expense account instead of a credit to an income account.
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A debit to an asset account instead of a credit to a liability account.
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A credit to an income account instead of a credit to an expense account.
Explanation
Double side error will not affect trial balance as in such cases both the sides i.e. debit and credit are affected. There will be no difference in trial balance due to such error.
A debit to an asset account instead of a credit to a liability account will affect the trial balance.
Which of the following errors will not affect the agreement of trial balance?
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Errors of Complete Omission
0%
Compensatory Errors
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Error of principle
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All of the above
Explanation
Error of complete omission, error of principle and compensating error cannot be disclosed from the trial balance as these are double sided error.
Trial balance will not have any affect due to such type of error.
If the amount is posted in the wrong account or it is written on the wrong side of the account, it is called _________.
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Error of omission
0%
Error of commission
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Error of principle
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Compensating error
Explanation
Option B is correct.
Error of commission - A
mistake
that consists of doing something wrong, such as including a wrong amount, or including an amount in the wrong place.
Error of omission - An error of omission happens when you forget to enter a transaction in the books. You may forget to enter an invoice you’ve paid or the sale of a service.
Error of principle -
A transaction that incorrectly uses an accounting principle is called an error of principle.
A
compensating error
is an accounting
error
that offsets another accounting
error
. These
errors
can be difficult to spot when they occur within the same account and in the same reporting period, since the net effect is zero.
The difference in trial balance is transferred to _________ if the errors are not identified.
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suspense account
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memorandum account
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capital account
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profit & loss account
Explanation
Ideally all errors have to be rectified before the end of the financial year. If the errors are not identified, than the difference in trial balance has to be transferred to a temporary account which is known as suspense account.
All rectification entries has to be passed through suspense account.
Which of the following error can be disclosed by trial balance?
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Error of principle.
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Error in balancing.
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Duplicating error.
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All of the above.
Explanation
Error of principle and duplication error cannot be disclosed from the trial balance as these are double-sided error. In both types of error, the trial balance will not have any effect.
Error of balancing will surely affect the trial balance as its a single side error. For example, sales day book total of Rs. 5460 is posted in sales ledger as Rs.5640.
_______ is opened to rectify the entries in the next accounting period which involves nominal accounts.
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Memorandum Adjustment Account
0%
Profit & Loss Adjustment Account
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Capital Adjustment Account
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Suspense Account
Explanation
Ideally , all errors have to be rectified before finalization of accounts. If the errors are not identified than these errors need to be transferred to suspense account. In the next financial year all such rectification need to be passed through profit & loss adjustment account if such entries of nominal account.
Which of the following errors will not affect the agreement of trial balance?
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Recording wrong amount in subsidiary book and in account of customer or creditor.
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Errors of duplication.
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Errors of complete omission.
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All of the above.
Explanation
A: Recording wrong amount in the subsidiary book and in customer a/c- Its a double-sided error affecting both the sided i.e. debit and credit. Hence no effect on the agreement of trial balance.
B: Errors of duplication- One transaction is recorded twice. It's a double-sided error. Hence no effect on the agreement of trial balance.
C: Errors of complete omission- One transaction is completely omitted in the recording. It's a double-sided error. Hence no effect on the agreement of trial balance.
Which of the following errors will not be revealed by the trial balance?
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Errors of principle.
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Wrong balancing of an account.
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Wrong totaling of an account.
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All of the above.
Explanation
Error of principle: This error will not be revealed by the trial balance as its a double-sided error.
Wrong balancing of an account: This error will not be revealed by the trial balance as only balances are carried to the trial balance.
Wrong totaling of an account: This kind of error cannot be revealed from the trial balance. These can only find out by scrutinizing the balances of each account if the trial balance is having difference.
Which of the following is true?
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Error of casting affects personal accounts.
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Omission of a transaction from a subsidiary record affects only one account.
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Error of carry forward affects two accounts.
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Error of principle involves an incorrect allocation of expenditure or receipt between capital and revenue.
Explanation
When an fundamental accounting principles are not followed while recording a transaction, it is an error of principle. For example, treating capital expenditure as revenue expenditure or vice -versa.
If a transaction is entered more than one time, it is known as _______________.
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0%
duplicating error
0%
errors of complete omission
0%
errors of principle
0%
compensating errors
Explanation
If a transaction is entered more than one time, its a duplicating error. For example, credit sales of Rs.500 to Ram is recorded twice or an expense of Rs.200 debited twice in expense account.
Which of the following statement is true?
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Error of totaling is an error of principal.
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Agreement of trial balance is not affected by error of principal.
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Error of principal does not affect profit & loss for the period.
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All of the above.
Explanation
When a fundamental accounting principles are not followed while recording a transaction, it is an error of principle. For example, treating capital expenditure as revenue expenditure or vice -versa.
In case of error of principle, trial balance will not be affected.
Treating a revenue expense as a capital expenditure is an example of __________.
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0%
compensating errors
0%
errors of principle
0%
errors of omission
0%
errors of commission
Explanation
When an fundamental accounting principles are not followed while recording a transaction, it is an error of principle. For example, treating capital expenditure as revenue expenditure or vice -versa.
For example, purchase of machinery is debited to trading purchases. Its an error of principle.
Which of the following errors will be revealed by the trial balance?
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0%
Errors of principle.
0%
Compensating errors.
0%
Wrong balancing of an account.
0%
Both (A) & (B).
Explanation
Error of principle- it can not be revealed by the trial balance.
Compensating error- It can not be revealed by the trial balance as one error will be compensated by the other error.
Wrong balancing of an account- It will affect the trial balance agreement as this will be one sided error.
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
i) True. An error of casting means the error of adding up the totals of the subsidiary books, this is an error of commission. Error of commission are the errors of wrong amount, wrong account etc.
ii) True. An error is wrong casting of sales day book will not affect the personal accounts of debtors. This will affect the trial balance.
iii) False. Mistake is transferring the balance of an account to the trial balance will affect the agreement of the trial balance as the debit and credit of the transactions will differ.
iv) True. The mistake of treating a liability as an income is a compensating error as both of them will affect the trial balance hence, will not affect the agreement of trial balance.
At the end of the accounting period or at the end of each month, the balances of the ledger accounts are extracted and is prepared to test as to whether the total debits are equal to total credits.
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0%
Profit & Loss Account
0%
Balance Sheet
0%
Cash Flow Statement
0%
Trial balance
Explanation
A trial balance is prepared at the end of the accounting period or at the end of each month, the balances of the ledger accounts are extracted and is prepared to test as to whether the total debits are equal to total credits. Its prepared to check the arithmetical accuracy of the books of account.
While finalizing the current year accounts, the company realized that an error was made in the calculation of closing stock of the previous year. In the previous year, closing stock was valued more by Rs$$50,000$$. As a result__________________.
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Previous year profit is overstated and current year profit is also overstated.
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Previous year profit is understated and current year profit is also overstated.
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Previous year profit is overstated and current year profit is also understated.
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There will be no impact on the profit of either the previous year or the current year.
Explanation
In case of overstatement of closing stock in previous year the profit of the previous year is overstated and the profit of the current year is understated. In previous year the cost of goods sold is reduced by 50,000 there by increasing the gross profit ( sale - COGS) and in the current year closing stock of previous year is the opening stock of current year there by increasing the Cost of goods sold and reducing the profits.
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