Account 1 Marks Question

Purchase of goods from Ravi for ₹ 5,000 on credit entered in the purchase book as ₹ 500.

If a wrong amount is entered either in the Journal or in the Subsidiary Books it is called error of Commission. Trial Balance will tally because the same amount (though wrong) will be posted in both the accounts affected by the transaction.

Compensating Error.

No. It is prepared or a particular date.

No. It is only a working paper.

The Debit Side of Trial Balance will be more by ₹ 10,000.

It will be recorded on the credit side of Suspense A/c.

Yes, Accounts which show no balance are not considered while preparing Trial Balance by Balance Method.

1. Errors of Omission.
2. Errors of Commission.

Debit side of Trial Balance will exceed by ₹ 5,000.

It appears in the Trial Balance if it has been deducted from Purchases.

Error of Principle.

Purchase of furniture is debited to purchase account instead of furniture account.

No, it is not an account. It is a statement, prepared with the debit and credit balances of ledger accounts.

1. To ascertain the arithmetical accuracy of the ledger accounts.
2. To help in locating errors.

If the effect of one error is neutralised by the effect of some other error, such errors are called compensating errors.

Trial Balance is a statement, prepared with the debit and credit balances of ledger accounts to test the arithmetical accuracy of the books.