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.

1. It is a list of balances of all Ledger Accounts and Cash Book.
2. It can be prepared on any date.

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.

Because wrong amount has been entered although in the correct account.

Compensating Error is the error the effect of which is nullified by another error of equal amount.

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.

Compensating Error.

1. Errors of Principle.

Example-Recording of machinery purchased as purchases.

2. Errors of Complete Omission.

Example-Goods purchased from Sita Rain of ₹ 5,000 but not recorded in the books of account.

Error of Principle means recording a transaction in contravention of accounting principles.

One-sided errors.

Accounts which do not show balance are not considered while preparing the Trial Balance by Balance Method.

No. Reason, Error of Recording has the same effect on both the Debit and Credit aspects of a transaction.

1. Repair expense of machinery debited to Machinery Account.
2. Commission paid for purchase of land is debited to commission Account instead of Land Account.

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

Rectifying entry means an entry passed to correct the error committed.

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

It facilitates the preparation of final accounts by making available the balances of a the accounts at one place.

Error of Omission means a transaction being omitted to be recorded completely or partially.

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

Machinery purchased for ₹ 5,000 has been debited to Purchases A/c.

A Compensating Error is not disclosed by the Trial Balance as one error is nullified by another error.

Error of Principle.

Error of Principle.

Error of Principle.

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

Suspense Account is an account in which the difference of Trial Balance is placed temporarily till the errors are located and rectified.

2. A Suspense Account.

Because the difference in a Trial Balance when located will be debited or credited to Suspense Account which ultimately should become nil.

The main objective of preparing a Trial Balance is to verify the arithmetical correctness of accounting entries.

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

No, the Trial Balance will not agree. Because a Trial Balance will agree only if both aspects of a transaction are posted into Ledger Accounts with correct amount.

1. Depreciation on computers not posted to Depreciation A/c.
2. Purchase of stationery of ₹ 500 posted twice to Stationery A/c.

Error of Partial Omission means a transaction being recorded partially and if recorded completely has been posted into Ledger Accounts partially.

Two-Sided Errors are those errors that have been committed on both sides, i.e., Debit and credit. Although error has been committed yet the Trial Balance will agree.

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

Goods returned to Kabir of ₹ 5,000 recorded in the Sales Return Book.

No. Reason, Such errors of posting have the same effect on both the Debit and Credit aspects of a transaction as posting has not been done in both the accounts.

Closing Stock is shown in the Trial Balance when the adjusting entry for Closing Stocks is passed in the books of account. It means that closing stock is adjusted against the purchases.

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

Yes, Trial Balance facilitates the preparation of Final Accounts by making available the balances of all the accounts at one place.

Error of Complete Omission means a transaction is not recorded in the books of account or if recorded has not been posted into Ledger Accounts.

1. Errors of Omission.
2. Errors of Commission.
3. Errors of Principle.
4. Compensating Errors.

Trial Balance is not an account. It is a statement which shows the names and balances of all the accounts in the Ledger and Cash Book of an enterprise at any given date.

(iii) and (iv) are not errors of principle because, (iii) has not been recorded in the books thus, is an error of omission and (iv) has been recorded in a wrong account with the correct amount.

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

A Trial Balance essentially proves the arithmetical correctness of the books of account. If totals of both the sides of a Trial Balance match then it is proved that books are at least arithmetically correct.