Chapter 6 Trial Balance and Rectification of Errors

1.       State the meaning of a Trial Balance

2.       Give two examples of errors of principle.

3.       Give two examples of errors of commission.

4.       What are the methods of preparing trial balance?

5.       What are the steps taken by an accountant to locate the errors in the trial balance?

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

7.       What kinds of errors would cause difference in the trial balance? Also list examples that would not be revealed by a trial balance.

8.       State the limitations of trial balance.

Long Answers

1. Describe the purpose of preparing the trial balance.

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

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

4. What are the different trypes of errors that are usually committed during the recording of business transactions?

5. As an Accountant of a company you are disappointed to learn that the totals in your new trial balance are not equal. After going through a careful analysis ou have discovered only one error. Specifically the balance of the office equipment account has a debit balance of 15600 on the trial balance. However you have figured out that a correctly recorded purchase of pendrive for Rs.3500 was posted from the journal to the ledger with a Rs.3500 to the office equipment account and another debit of Rs,3500 to the creditors account. Answer each of the following questions and present the amount of any misstatement:

a.   Is the balance office equipment amout overstated, understated or correctly stated in the trial balance?

b.   Is the balance of creditors 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 240,000 before correcting the error, what is the total of the credit column?