Trial Balance And Rectification Of Errors - Class 11 Commerce Accountancy - Extra Questions

What do you mean by error of omission?

The error of omission is the error that occurs when a transaction is not recorded in the books of original entry. These are of two types: 
1. Error of complete omission: When a transaction is completely omitted from recording in the books of the original record, it is an error of complete omission.
2. Error of partial omission:  When the recording of a transaction is partly omitted from the books, it is an error of partial omission. 


Explain the errors of commission and give two examples with measures to rectify them.

Errors of commission are those errors which may be committed when transactions are recorded with wrong amounts, wrong balancing is done, wrong posting and/or wrong carrying forwarded is done. Here are some examples which will illustrate the errors of commission in detail.
Let us consider the first example.
Sales return from Megha Rs 1,600 were posted to her account as Rs 1,000. This is an error of commission.
The rectification entry for the above error will be
Suspense A/c              Dr600
To Megha600
(Being sales return from Megha Rs 1,600 were posted to her account as Rs 1,000 now rectified) 
Let us consider the second example.
Cash received from Karim Rs 6,000 posted to Nadim. This is an error of commission.
The rectification entry for the above error will be
Nadim                               Dr6000
To Karim6000
(Being cash received from Karim Rs 6,000, wrongly posted to Nadim's account now rectified) 


State the meaning of a trial balance.

A trial balance is a statement showing the balances or total of debits and credits, of all the accounts in the ledger with a view to verify the arithmetical accuracy of posting into the ledger accounts.
It is prepared after balancing all the accounts of ledger that's why there are two columns in a Trial Balance; debt and credit. Debit side of trial balance includes all the debit balances and credit side includes all the credit balances of the ledger accounts.


Furniture purchased from M/s Rao Furnishing for Rs 8,000 was entered into the Purchase book.
State the wrong entry recorded in the book of accounts
   
   
Correct effect should have been
   
   
The rectification entry will be
   
   
   

Furniture purchased from M/s Rao Furnishing for Rs 8,000 was entered into the Purchase book.
This is an error of Principle.
State the wrong entry recorded in the book of accounts.
Purchase A/c          Dr8,000
To Rao8,000
Correct effect should have been
Furniture A/c               Dr8,000
To Rao8,000
The rectification entry will be
Furniture A/c                 Dr8,000
To Purchase A/c8,000


Explain errors of principle and give two examples with measures to rectify them.

'Errors of principle' are those errors which are committed at the time of recording transactions against the accounting principle. Here are the examples of Errors of Principle
(i) Expenses Paid for Installation of Machinery Debited to Expenses Account In this transaction, expenses paid for the installation of machinery which is a capital expenditure and should be debited to machinery account has been treated as revenue expenditure and wrongly debited sundry expenses account. This error violates the accounting principle.
The wrong effect has been
Expenses A/c      Dr  
To Cash A/c  
The correct effect should have been
Machinery A/c      Dr  
To Cash A/c  
The rectification entry will be
Machinery A/c      Dr  
To Expenses A/c  
(ii) Amount Spent on Repair of Machinery Debited to Machinery Account In this transaction, amount of repair is revenue expenditure and should be debited to repair account which has been treated as capital expenditure and wrongly debited to the machinery account. This error also violated the accounting principle.
The wrong effect has been
Machinery A/c      Dr  
To Cash A/c  
The correct effect should have been
Repair A/c      Dr  
To Cash A/c  
The rectification entry will be
Repair A/c      Dr  
To Machinery A/c  


Cash sales to Radhika Rs 15,000 was shown as receipt of commission in the cash book.
This is the error of ...........
State the wrong entry recorded in the book of accounts
   
   
Correct effect should have been
   
   
The rectification entry will be
   
   
   

Cash sales to Radhika Rs 15,000 was shown as receipt of commission in the cash book.
This is the error of Commission.
State the wrong entry recorded in the book of accounts.
Cash A/c          Dr15,000
To Commission A/c15,000
Correct effect should have been
Cash A/c               Dr15,000
To Sales A/c15,000
The rectification entry will be
Commission A/c          Dr15,000
To Sales A/c15,000


Give two examples of errors of commission.

Here are the two examples of errors of commission
(i) Credit sales to Mohan Rs 10,000 were posted to his account as Rs 12,000.
(ii) Cash sales to Radhika Rs 15,000 was shown as receipt of commission in the cash book.


What is a suspense account? Is it necessary that suspense account will balance off after rectification of the error detected by the accountant? If not, then what happens to the balance still remaining in suspense account?

When the total of trial balance does not tally at the time of closing the account book, the accountant tallies the trial balance by putting the difference on shorter side as 'suspense account'. If the suspense account appears in debit side, it is posted in Assets side of the Balance Sheet and if it appears in the credit side of the trial balance, it is posted in Liabilities side of the Balance Sheet.


Give two examples of errors of principle.

Here are the examples of errors of Principle
(i) Expenses Paid for Installation of Machinery Debited to Expenses Account. In this transaction, expenses paid for the installation of machinery which is a capital expenditure and should be debited to machinery account has been treated as revenue expenditure and wrongly sundry expenses account. This error violates the accounting principle.
(ii) Amount Spent on Repair of Machinery Debited to Machinery Account. In this transaction, amount of repair is revenue expenditure and should be debited to repair account which has been treated as capital expenditure and wrongly debited to the machinery account. This error also violated the accounting principle.


Give one word, term or phrase which can substitute each of following statements:
A list of Debit and Credit Balances of the ledger accounts.

Trial Balance 


Give the word, term or phrase which can substitute the following statement.
A statement of accounts prepared from  the balances of ledger accounts.

Trial Balance


What is a Trial Balance?

1. Trial Balance is an abstract or a list of all the ledger accounts as on a specified date showing debit total and credit total of all accounts or their net balances.
2. It is an internal financial report to make sure that the total of debit balances equals the total of credit balances of all the ledger accounts.
3. It forms the basis for preparation of the financial statements which includes trading, profit & loss account and balance-sheet.


Give one Word/Term or Phrase for each of the following statements.
An entry passed to cancel wrong effects given and give correct effect to accounts affected.

Rectification entries
Those entries that are passed to cancel the incorrect effects of a given entry and to give the correct effect to accounts affected are known as rectification entries. Rectification entries are passed to rectify the errors  committed at the time of recording or posting entries.


Answer the following question in One sentence each.
What is one sided error?

If one accounting effect of the given transaction is recorded correctly in the books of account but error is committed in recording the other accounting effect, the error so committed is called one sided error. 


Give one Word/Term or Phrase for each of the following statements.
Errors of calculation.

Arithmetical errors
Errors related to wrong calculations are known as arithmetical errors. Theses errors affect the agreement of the trial balance. For example, wrong casting and errors of totalling are related to arithmetical errors.


Give one Word/Term or Phrase for each of the following statements.
Account to which difference in trial balance is transferred.

Suspense account
When the totals of the debit and credit balances of the trial balance do not match, then the difference is transferred to a temporary account known as Suspense A/c. This account is opened in order to avoid a delay in the preparation of financial statements. A Suspense A/c is used to rectify the one-sided or single-sided errors.


Answer the following question in One sentence each.
State the meaning of 'Suspense Account'. 

An account which is opened and operated by transferring difference in the totals of trial balance to pass one accounting effect of rectification of one sided accounting errors is called suspense account.


Answer the following question in One sentence each.
What do you mean by two sided errors? 

An accounting errors which affect the debit and credit side of the two different accounts equally are called two sided errors.


Answer the following question in One sentence each.
What do you mean by compensating error?

Error which is committed on one side of ledger account compensates on error committed on the other side of some other ledger account is called compensating error.


Some of the transactions of a firm are given below. Against each transaction the accounts to be debited and credited are given. There are some obvious errors. Point out the errors and give correct answers.
Sold old machinery to Khan on credit : Debit Khan; Credit Goods or Sales.

Credit Machinery.


Answer the following question in only 'one' sentence.
What is 'trial balance'?

A trial balance is a bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal. A company prepares a trial balance periodically, usually at the end of every reporting period.


Answer the question.
Explain the different types of errors in the Accounting process?

Errors can broadly be classified in two categories:
$$1$$. Errors of Omission: If a transaction has not been entered in the books of account either wholly or partially is known as an error of omission.
$$2$$. Errors of Commission: These refer to a transaction being incorrectly recorded in the journal or inaccurately posted in the ledger.
$$3$$. Compensating Errors: These errors arise when two or more errors exactly nullify the effect of one another. Thus, the errors are such that their over all effect on the trial balance is nil.
$$4$$. Error of Principle: These arise when some fundamental principles of sound accountancy are not strictly adhered to in recording a transaction.


Give journal entries (narrations not required) to rectify the following:
(i) Purchase of Furniture on credit from Nigam for Rs. $$3000$$ posted to Subham account as Rs. $$300$$
(ii) A sales Return of Rs. $$5,000$$ to Jyothy was not entered in the financial accounts though it was duly taken in the stock book.
(iii) Investments were sold for Rs. $$75,000$$ at a profit of Rs. $$15,000$$ and passed through Sales account.
(iv) An amount of Rs. $$10,000$$ withdrawn by the proprietor (Darshan) for his personal use has been debited to Trade Expenses account.

Journal Entries

Particulars
L.F
Dr. (Rs.)
Cr. (Rs.)
(i) 
Subham A/c
Dr.
$$300$$


Furniture A/c
Dr.
$$2,700$$


To Nigam A/c


$$3,000$$
(ii)
Sales Returns A/c
Dr.
$$5,000$$


To Jyothy A/c
Dr.

$$5,000$$
(iii)
Sales A/c
Dr.
$$75,000$$


To P & L A/c (gain
        on sale of investment)
Dr.

$$15,000$$

To investment A/c


$$60,000$$
(iv)
Drawings A/c
Dr.
$$10,000$$


To trade Expenses A/c


$$10,000$$


Give one Word/Term or Phrase for each of the following statements.
Errors of incorrect entries or wrong posting.

Error of Commission
An error of commission is related to wrong recording or posting of the amount in the same account or different accounts, wrong totaling, etc. Thus, all the errors related to recording or posting of incorrect entries are termed as errors of commission. It is also known as a two-sided error, i.e. this type of error does not affect the trial balance. For example, goods worth Rs. 5,600 sold to X were recorded in the journal as Rs. 6,500 and also posted as Rs. 6,500. Hence, it is termed as an error of commission and will not affect the agreement of the trial balance.


Give one Word/Term or Phrase for each of the following statements.
Transaction remained to be recorded at all in the books of accounts.

Error of Omission
When a transaction is altogether omitted from being recorded in the books of accounts, then it will be termed as an error of omission. Such an error will not affect the agreement of the Trial Balance, as the transaction has not been recorded in the books of accounts.


As an accountant for a company, you are disappointed to learn that the totals in your new trial balance are not equal. After going through a careful analysis, you have discovered only one error. Specifically, the balance of the Office Equipment account has a debit balance of Rs 15,600 on the trial balance. However, you have figured out that a correctly recorded credit purchase of pen drive for Rs 3,500 was posted from the journal to the ledger with a Rs 3,500 debit to Office Equipment and another Rs 3,500 debit to creditor's accounts. Answer each of the following questions and present the amount of any misstatement
(a) Is the balance of the office equipment account overstated, understated or correctly stated in the trial balance?
(b) Is the balance of the creditor's account overstated, understated or correctly stated in the trial balance?
(c) Is the debit column total of the trial balance overstated, understated or correctly stated?
(d) Is the credit column total of the trial balance overstated, understated or correctly stated?
(e) If the debit column total of the trial balance is Rs 2,40,000 before correcting the error, what is the total of credit column?

According to the given information, trial balance does not agree. Pen-drive is wrongly debited to office equipment account, instead of stationery account and supplier account is debited instead of crediting.

Due to these mistakes, the following errors are committed:
1. The balance of office equipment is overstated by Rs. 3,500.
2. The balance of creditors account id understated by Rs. 7,000.
3.The total of the debit column of the trial balance is correctly stated.
4. The total of the credit column of the trial balance is understated by Rs. 7,000.
5. If the total of the debit column of the trial balance is Rs. 2,40,000 before rectifying error, the total of the credit column of the trial balance is Rs. 2,33,000 (i.e., Rs. 2,40,000 - Rs. 7,000).


Indicate against each amount whether it is a debit or a credit balance and prepare a trial balance as at March 31, 2009 based on the following balances :
Accounts TitleAmt. (Rs)
Capital1,00,000
Drawings16,000
Machinery20,000
Sales2,00,000
Purchase2,10,000
Sales return20,000
Purchase return30,000
Wages40,000
Goodwill60,000
Interest received15,000
Discount allowed6,000
Bank overdraft22,000
Bank loan90,000
Debtors
Nathu55,000
Roopa20,000
Creditors
Reena35,000
Ganesh25,000
Cash54,000
Stock on April 1, 200416,000

Trial Balance as on 31st March, 2009
Account TitleAmt. (Dr)       Amt. (Cr)
Capital1,00,000
Drawings16,000
Machinery20,000
Sales2,00,000
Purchase2,10,000
Sales return20,000
Purchase return30,000
Wages40,000
Goodwill60,000
Interest received15,000
Discount allowed6,000
Bank overdraft22,000
Bank loan90,000
Debtors
Nathu55,000
Roopa20,000
Creditors
Reena35,000
Ganesh25,000
Cash54,000
Stock on April 1,200416,000
Total5,17,0005,17,000


Match List I with List II and select the correct answer:

Keeping in view the nature of errors, all the errors can be classified into the following four categories:
1. Compensating errors: When two or more errors are committed in such a way that the net effect of these errors on the debit and credits of accounts is nil, such errors are called as compensating errors. Such errors do not affect the tallying of the trial balance.
2. Errors of Omission: The errors of omission may be committed at the time of recording the transaction in the books of original entry or while posting to the ledger. When a transaction is completely omitted from recording in the books of original record, it is an error of complete omission. When the recording of transaction is partly omitted from the books, it is an error of partial omission.
3. Errors of principle: Accounting entries are recorded as per the generally accepted accounting principles. Is 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.
4. Errors of commission: These 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.


Miss Daisy was unable to agree the Trial Balance last year and wrote off the difference to the profit and loss account of that year. On verifying the old books by a Chartered Accountant next year, the following mistakes were found.
(i) Purchase account was undercast by Rs. $$8,000$$
(ii) Sale of goods to Mr. Raim for Rs. $$2,500$$ was omitted to be recorded
(iii) Receipt of cash from Mr. Ashok as posted to the account of Mr. Anbu Rs. $$1,200$$
(ix) Amount of Rs $$4,167$$ of sales was wrongly posted as $$Rs. $$4,617$$
(v) Repairs to Machinery was debited to Machinery Account Rs. $$1,800$$
(vi) A credit purchase of goods from Mr. Paul for Rs. $$3,000$$ entered as sales
Suggest the necessary rectification entries

Journal Entries in the books of Miss Daisy
DateParticularsDr. (Rs.)Cr. (Rs.)
(i) Profit & Loss Adjustment A/cDr.$$8,000$$
     To Suspense $$^{\ast}$$ A/c
(Purchase Account under cast in the previous year, error now rectified)		$$8,000$$
(ii)Rahim's AccountDr.$$2,500$$
   To Profit & Loss Adjustment A/c
(Sales to Rahim omitted last year, now adjusted)		$$2,500$$
(iii)Anbu's AccountDr.$$1,200$$
   To Asok Account
(Amount received from Asok wrongly posted to the account of Anbu; now rectified)		$$1,200$$
(iv)Profit & Loss Adjustment A/cDr.$$450$$
  To Suspense $$^{\ast}$$ A/c
(Excess posting to sales account last year, Rs. $$4,617$$, instead of Rs. $$4,167$$ now adjusted)		$$450$$
(v)Profit & Loss Adjustment A/cDr.$$1,800$$
   To Machinery A/c
(Repairs to machinery was wrongly debited to machinery account, now rectified)		$$1,800$$
(vi)Profit & Loss adjustment A/cDr.$$6,000$$
  To Mr Paul Account
Credit purchase of goods from Mr. Paul sale last year, now rectified)		$$6,000$$
(vii)Daisy's Capital A/cDr.$$13,750$$
  To Profit & Loss Adjustment A/c
(Being balance in P & L Adjustment Account transferred to Daisy's Capital A/c-Refer W.N1)		$$13,750$$
(viii)Suspense A/cDr$$8,450$$
  To Daisy's Capital A/c
(Being balance of Suspense A/c transferred to Capital A/c- Refer W.N 2)		$$8,450$$
$$^{\ast}$$ Considering that the difference was posted to Suspense account
 
Working Notes
(1) Profit and Loss Adjustment Account

Rs.Rs.
To Suspense A/c$$8,000$$By Rahim's A/c$$2,500$$
To Suspense A/c$$450$$By Daisy's Capital A/c
(Bal. Transfer)		$$13,750$$
To Machinery A/c$$1,800$$
To Mr. Paul's A/c$$6,000$$
$$16,250$$$$16,250$$
(2) Suspense Account
Rs.Rs.
To Daisy's Capital A/c
(Balance Transfer)		$$8,450$$By P & L Adj. A/c$$8,000$$

By P & L Adj. A/c$$450$$
                                             $$8,450$$                                      $$8,450$$


Class 11 Commerce Accountancy Extra Questions