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CBSE Questions for Class 11 Commerce Accountancy Trial Balance And Rectification Of Errors Quiz 8 - MCQExams.com
CBSE
Class 11 Commerce Accountancy
Trial Balance And Rectification Of Errors
Quiz 8
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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Credit A/c Dr. $$2,000$$
To Suspense A/c $$2,000$$
0%
Discount A/c Dr. $$2,000$$
To Suspense A/c $$2,000$$
0%
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
.
Which of the following errors will affect the trial balance?
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Repairs to building wrongly debited to Building A/c.
0%
Total of Purchase Journal by Rs
1
,
000
1
,
000
short.
0%
Freight paid on new machinery debited to Freight A/c.
0%
None of the above.
Explanation
A. Repairs to building wrongly debited to Building a/c- its a double sided error and hence trial balance will have no disagreement.
B.Total of purchase journal short by Rs. 1000- its a single sided error, hence affect the trial balance.
C. Freight paid on new machinery debited to freight a/c- its a double sided error, hence will not affect trial balance.
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 $$2,000$$
0%
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 was totaled short 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 mentioning that "To short total of purchase book for Rs.10000"
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
Trial balance is prepared by taking all the ledger account balances in a list. Trial balance is prepared to check the arithmetical accuracy of books of account. If trial balance agrees, it is assumed that the books of account are arithmetical correct. So, it is prepared just to check that all posting are done. Trial balance has no statutory importance from the point of view of law.
An entry for the goods sold to Madhav for Rs$$1,020$$ was posted to his accountants as Rs$$1,200$$. If rectification is done before preparation of trial balance then which of the following is correct?
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Suspense A/c Dr $$180$$
To Madhav A/c $$180$$
0%
Profit & Loss Adj.A/c Dr $$180$$
To Madhav A/c $$180$$
0%
Credit Madhav with Rs$$180$$ saying "By Excess debit for sales Rs$$180$$".
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Debit Madhav with Rs$$180$$ saying "To Excess debit for sales Rs$$180$$".
Explanation
There is an excess debit of Rs.180 to Madhav's a/c due to wrong posting of amount as Rs.1200 instead of Rs.1020. This is an error of commission.
A rectification entry has to be passed as:
Credit Madhav A/c with Rs.180 mentioning "excess debit for sale Rs.180".
Goods bought from Mukesh amounting to Rs $$5,500$$ were posted to the credit of his account as Rs$$5,000$$. If this error located after preparation of trial balance then which of the following rectification entry is correct?
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Suspense A/c Dr $$500$$
To Mukesh A/c $$500$$
0%
Mukesh A/c Dr $$500$$
To Suspense A/c $$500$$
0%
Profit & Loss Adj.A/c Dr $$500$$
To Mukesh A/c $$500$$
0%
Mukesh A/c Dr $$500$$
To Profit & Loss Adj.A/c $$500$$
Explanation
Correct entry :-
Purchase Account ......... Dr 5.500
To Mukesh A/c 5,500
Wrong entry:-
The error is done while posting, this is an error of casting where mukesh account is credited less by RS-500.
Rectification entry:-
Suspense A/c ..............Dr 500
To
Mukesh
A/c 500
Note:-
Suspense account is created temporarily when there is no subsequent account to debit/credit, usually in errors of posting.
Under statement of closing stock or work-in-progress in the period will _________.
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understate cost of goods manufactured in that period
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overstate current assets
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overstate gross profit from sales in that period
0%
understate net income in that period
Explanation
Closing stock is shown in the credit side of the trading account. Hence if the closing stock is under stated, it will affect the gross margin of the business.
Hence if the closing stock is under stated, this will results lower net income in that period.
A sale of Rs$$13,600$$ was recorded in the sales journal as Rs$$3,600$$ and posted to Govind, the customer as Rs$$6,300$$. Identify the amount of the trial balance difference which will be placed in a suspense account.
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Dr.$$12,700$$
0%
Cr.$$2,700$$
0%
Dr.$$2,700$$
0%
Cr.$$12,700$$
Explanation
Credit side (sales journal) is an amount of RS-3,600 whereas Debit side (Govind A/c) shows a balance of RS-6,300. Hence, the credit side is less by RS-2,700 (6,300 - 3,600).
Rs$$2,400$$, being the pre-paid portions 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. $$2,400$$
Explanation
Amount of the trial balance difference which will be posted to trial balance will be RS-4,800. One for not debiting RS-2,400 as pre-paid insurance is an asset and 2nd for the wrong credit of RS-2,400.
Credit side of the trial balance was Rs$$11,200$$ lower than the debit side. The difference was placed in suspense. The correction of which of the following errors will reduce the suspense account balance?
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Stationery acquired on credit terms for $$Rs340$$ has been recorded in the purchases journal.
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A cash sale of Rs$$3,400$$ has been posted as Rs$$4,300$$
0%
A credit purchase of Rs$$2,150$$ has not been posted to the customer.
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A credit Note for Rs$$900$$ from a supplier has not been entered in return outwards day book.
Explanation
A Credit purchase of RS-2,150 which has not been posted to the customer account will increase the credit balance thereby reducing the balance of suspense account of RS-11,200.
Drawings of goods costing $$300$$ were not recorded in the books of account. If this error located after preparation of trial then which of the following rectification entry is correct?
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Purchases A/c Dr $$300$$
To Drawings A/c $$300$$
0%
Drawings A/c Dr $$300$$
To Suspense A/c $$300$$
0%
Profit & Loss Adj. A/c Dr $$300$$
To Purchases A/c $$300$$
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Drawings A/c Dr $$300$$
To Purchases A/c $$300$$
Explanation
Goods used for personal purposes has to be recorded as drawings. This is a double sided error and will not affect the trial balance. If this error located after preparation of trial balance, the following rectification will be passed:
Drawings A/c Dr. 300
To Purchases A/c 300
Bank overdraft is shown on the _______ side of trial balance.
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0%
credit
0%
debit
0%
front
0%
none of these
Explanation
Bank overdraft is a liability and liabilities are always having a credit balance.
Therefore, bank overdraft is to be shown on the credit side of the trial balance.
Which of the following is/are method for preparation of trial balance?
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Balances Method
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Totals Method
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Both (A) & (B)
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None of the above
Explanation
Trial balance is normally prepared at the end of the financial year to check whether all entries are posted in the ledger. If trial balance agrees, it proves that books are arithmetically correct. Trial balance can be prepared by various methods:
1) Balance method in which only net balances of each account are carried to trial balance depend on the balance i.e. debit or credit.
2) Totals method in which the total of both the sides i.e. debit and credit are carried to the trial balance.
Cartage Rs$$780$$ paid on machinery newly acquired was debited to carriage inward account. If this error located after preparation of trial balance then which of the following rectification entry is correct?
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Machinery A/c Dr. $$780$$
Carriage Inwards Dr. $$780$$
To Profit & Loss Adj. A/c $$1,560$$
0%
Machinery A/c Dr. $$780$$
To Carriage Inwards A/c Dr. $$780$$
0%
Suspense A/c Dr. $$1,560$$
To Machinery A/c Dr. $$780$$
To Carriage Inwards A/c $$780$$
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Carriage Inwards A/c Dr $$900$$
To Machinery A/c Dr. $$900$$
Explanation
Correct entry :-
Machinery A/c ......... Dr 780
To Cash A/c 780
Wrong entry:-
Carriage inwards A/c .......Dr 780
To Cash A/c 780
Rectification entry:-
Machinery
A/c ..............Dr 780
To Carriage inwards
A/c 780
As carriage inwards account was wrongly debited instead of machinery account, carriage inwards will be credited and machinery account will be debited to rectify the mistake.
A few errors committed in Amrut's books of account are given below. State which errors would affect the trial balance.
(1) Sales of Rs$$950$$ to Ram completely omitted from books of account.
(2) Purchases of Rs$$720$$ from Shyam entered in the purchases journal as Rs$$700$$.
(3) Purchases Journal is overcast by Rs$$1,000$$
(4) Sales returns journal is under cast by Rs$$200$$.
(5) Amount paid to Agarwal wrongly posted to the debit to Mittal's account.
(6) Bank overdraft shown under debit column in the Trial Balance.
(7) Sales of Rs$$500$$ to Sadiq entered in sales journal as sales to Mushtaq.
(8) Wages paid for installation of machinery debited to wages account.
Select the correct answer from the options given below.
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(1), (3) and (7)
0%
(3), (4) and (6)
0%
(3), (4), (5)and (8)
0%
(3), (4), (6)and (8)
Explanation
The errors which will affect the trial balance are 3rd, 4th and 6th errors.
3) Purchase journal is overcast by RS-1,000.
This will affect the trial balance as only the debit side of the transaction has an error and the other side is correct thereby affecting the trial balance.
4) Sales return journal is undercast by RS-200.
This will affect the trial balance as only the debit side of the transaction has an error and the other side is correct thereby affecting the trial balance.
6) Bank overdraft shown in the debit column in the trial balance. Bank overdraft has a credit balance, and is debited, so both the debit and credit are affected thereby affecting the trial balance.
Which of the following error will disturb the balancing of the trial balance?
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Recording in the purchases journal an invoice for acquiring a non current asset for Rs$$60,000$$.
0%
Adding up the returns inwards journal as Rs$$11,400$$ instead of Rs$$12,600$$.
0%
Recording a sales invoice for Rs 5,600$$ as Rs $$6,500$$ in the sales journal.
0%
Failing to record a purchase invoice for Rs $$54,000$$ in the purchases journal.
Explanation
A trial balance is prepared to check the arithmetical/mathematical accuracy of the balance of the books of the account. Adding up return inwards journal as RS-11,400 Instead of RS-12,600 is an error of commission hence, will be detected as its an arithmetical error.
While carrying forward the total of one page of the Purchases Book to the next, the amount of Rs$$12,350$$ was written as Rs$$13,250$$. If this error located after preparation of trial then which of the following rectification entry is correct?
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Purchases A/c Dr. $$900$$
To Profit & Loss Adj. A/c $$900$$
0%
Purchases A/c Dr. $$900$$
To Suspense A/c $$900$$
0%
Profit & Loss Adj. A/c Dr. $$900$$
To Purchases A/c $$900$$
0%
Suspense A/c Dr. $$900$$
To Purchases A/c $$900$$
Explanation
This is an error occurred while posting/transferring of balance known as error of casting. When there is error only in one part of the transaction i.e the error is in posting the balance of purchase book and not the creditor/cash account. The entry will be:-
Suspense A/c ...........Dr 900
To Purchases A/c 900.
The balances of all assets accounts, expenses accounts, losses, drawing are placed in the __________ of the trial balance.
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0%
credit column
0%
debit column
0%
ledger folio
0%
none of the above
Explanation
There are golden rule of accounting for recording the transactions based on the type of account i.e personal a/c, real a/c and nominal a/c.
Based on such rules of accounting, assets account, expenses account, losses and drawings are always have a debit balance. Hence while preparing the trial balance, all such accounts are placed in the debit column of the trial balance.
Which of the following statement is correct?
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If there is gross loss in trading account then profit & loss account will also have net loss always.
0%
Balance sheet gets tallied even if there is a two sided error.
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Cash book is similar to balance sheet.
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All of the above.
Explanation
Only statement B is correct.
A - False. If there is gross loss it's not necessary to always have a net loss. There may be a possibility that the company may have more indirect income than indirect expenses.
B - True. The balance sheet gets tallied even if there are 2 sided errors or commonly known as compensating errors. These errors do not affect the agreement of the trial balance.
C - False. Cashbook is not similar to a balance sheet, but a cash book is similar to a receipts and payments account, and a post-closing trial balance is like a balance sheet as it contains only balance sheet figures.
The balances of all liabilities accounts, income accounts, profits, capital are placed in the _________ of the trial balance.
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0%
credit column
0%
debit column
0%
ledger folio
0%
none of the above
Explanation
There are golden rule of accounting for recording the transactions based on the type of account i.e personal a/c, real a/c and nominal a/c.
Based on such rules of accounting, liabilities account, income account, profits and capital are always have a credit balance. Hence while preparing the trial balance, all such accounts are placed in the credit column of the trial balance.
Difference of totals of both debit and credit side of the trial balance is transferred to _________.
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Miscellaneous Account
0%
Difference Account
0%
Trading Account
0%
Suspense Account
Explanation
Accounting is based on the dual aspect concept. Whereas every business transaction affects two account. For every debit there will be a credit and vice-versa. In such situation trial balance must be tallied.
But due to some clerical error done while doing the accounting, there are chances that trial balance will not agree. In such case, the difference in trial balance is transferred to a temporary account named as "suspense a/c".
If the rate of gross profit increases in the current financial year, the same may happen due to which of the following reason?
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There is omission of purchases which was not accounted for.
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Closing stock was valued at higher price.
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Selling price has been increased without corresponding increase in cost.
0%
All of the above.
Explanation
If the gross profit has shown an increase as compared to the previous year, and in-depth analysis has to be carried out to find out the reasons for such higher profits. Below are the probable reasons of showing the higher gross profit:
1) Purchases are omitted while recording the transactions.
2) Closing stock is valued at higher prices.
3) Selling prices are increased in the current year without a corresponding increase in cost.
A ______ is a schedule or list of balances of both debit and credit extracted from various accounts.
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0%
Profits & Loss Account
0%
Balance Sheet
0%
Cash Flow Statement
0%
Trial balance
Explanation
Trial balance is normally prepared at the end of the financial year to check whether all entries are posted in the ledger. It is prepared by taking the balances of both debit and credit extracted from various accounts in a list.
If trial balance agrees, it proves that books are arithmetically correct.
If the trial balance do not agree after transferring the balance of all 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 knows as_____________.
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Memorandum Account
0%
Capital Account
0%
Suspense Account
0%
Drawing Account
Explanation
If the trial balance do not agree after transferring the balance of all 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 knows as suspense account.
It is temporary account prepared when the destination of transaction cannot be determined.
State with reasons whether the following statement is true or false:
Error of principle involves an Incorrect allocation of expenditure or receipt between capital and revenue.
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True
0%
False
Explanation
True.
Error of principle involves an Incorrect allocation of expenditure or receipt between capital and revenue. Error of principle means that the error violates the basic fundamental principle of accounting.
State with reasons whether the following statement is true or false:
Compensating errors do not disturb agreement of Trial Balance.
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0%
True
0%
False
Explanation
True. Compensating error do not disturb the agreement of trial balance. These error have nil affect on the debit / credit of a transaction.
Closing stock will never appear in the Trial Balance.
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0%
True
0%
False
Explanation
Closing stock (Dr. balance) will be given in the trial balance, if purchase account is already adjusted with the closing stock.Therefore, in such situation, adjusted purchase will be shown on the debit side of the trading A/c and closing stock will be shown on the asset side of the Balance Sheet.
State with reasons whether the following statement is 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 omission.
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0%
True
0%
False
Explanation
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. Error of commission is where there is an error of posting in wrong amount, wrong account etc.
Which of the following statement contains all the types of account i.e., personal, real & nominal account?
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Balance sheet
0%
Trial balance
0%
Income statement
0%
None of the above
Explanation
Trial balance is a list of all the balances of each of the account. It includes all accounts of expenses, incomes, assets, liabilities, personal account.
Preparation of trial balance includes all types of account i.e. personal, real ad nominal account.
___________ is a statement of debit & credit balances, while __________ is a statement of assets and liabilities.
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0%
Profit & loss, Balance sheet
0%
Trial balance, Balance sheet
0%
Balance sheet, Trading account
0%
Trial balance, Profit & loss
Explanation
Trial balance is a list of all the balances of each of the account. It includes all accounts of expenses, incomes, assets, liabilities, personal account.
Balance Sheet is a statement of assets and liabilities. It shows the financial position of the organization on a particular date.
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