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Trial balance will detect.?

<p><strong>a) Errors of commission</strong><strong>b) Errors of omission</strong><strong>c) Errors of principle</strong><strong>d) Compensating errors</strong></p>

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Question ajoutée par VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.
Date de publication: 2014/11/01
Abdallah Abu Zeyad CMA
par Abdallah Abu Zeyad CMA , Finance Account Manager , Toyota - Abdul Latif Jameel Motors - KSA

The general purpose of producing a trial balance is to ensure the entries in a company's bookkeeping system are mathematically correct.

Ijaz Ahmad
par Ijaz Ahmad , Manager Finance , VIP Wears (Pvt) Limited

Trial Balance determine the arithmetical accuracy of accounting books

Shamna Mohammed Ali
par Shamna Mohammed Ali , Accountant , Almoayed Chambers

Option B. Errors Of Omission.

VENKITARAMAN KRISHNA MOORTHY VRINDAVAN
par VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.

Errors  not revealed by the trial balance

i.                    Error of omission

This is an error where a transaction is completely omitted from the books. No entries were made at all for the transaction. It is as if the transaction has not existed.

ii.                  Error of commission

In this case, double entry was observed but the transaction was posted to a wrong account of the same class. For example goods sold to John was correctly credited to Revenue (Sales) account but debited to Jane’s account.

iii.                Error of principle

Double entry observed but an entry made in the wrong class of account. For example, payment by cheque for vehicle repairs correctly credited to bank account but debited to vehicle account instead. In this case, not only the account is wrong (vehicle instead of vehicle repairs) but also the class of account is different. Vehicle account is a real account (asset) whereas vehicle repairs account is a nominal account (expense).

iv.                 Error of original entry

The transaction was correctly according to the double entry system but with the wrong amount. For example, payment of telephone expenses in cash of $560 was credited to cash account and debited to telephone expenses account but by $600 in both accounts.

 

          Complete reversal of entries

For a given transaction, the account to be debited was credited and the account to be credited was debited. For example, goods sold to Nadia for $500 was debited to Revenue (Sales) account and credited to Nadia’s account, both by $500.

vi.                 Compensating errors

Errors on the debit side of the ledger have been set off by errors on the credit side of the ledger. For example, vehicle account (debit balance) and commission received account (credit balance) were both understated by $200.

vii.               Error of duplication

A transaction was recorded twice in the ledger. Double entry was observed in each case.

viii.             Error of transposition

For a given transactions, double entry was correctly observed but the figures in amount were not written in the correct order. Examples are: writing $450 instead of $540, $71 instead of $17, $1425 instead of $1452, etc. For example, cash received from Sam $164 was debited to cash account and credited to Sam’s account at $146.

 

Errors revealed by the Trial Balance

In subsidiary books:

i.                    Error in total

Individual entries from subsidiary books are entered individually in personal accounts in the sales ledger and purchases ledger while the totals are entered in nominal accounts in the general ledger. In any case, total of entries in personal accounts should be equal to amount in nominal account. However, when totals in subsidiary books are wrongly calculated, total of entries in personal accounts will not be equal to amount in nominal account. Thus, trial balance will not balance. For example, credit sales totaling $5600 were correctly debited to customers account but sales account was credited by $5500 because sales day book was wrongly totaled.

In ledger:

ii.                  Omission of one entry

This is a situation where only one entry was made for a transaction. The other entry was omitted from the ledger. For example, payment for repairs was credited to bank account but no entry made in repairs account.

iii.                Posting to the wrong side of the ledger for one entry

This is a situation where, for a given transaction, one entry was correctly made but the other entry was made on the wrong side of the ledger, at times in the wrong account as well. For example, discount allowed was wrongly credited to discount received account.

iv.                 Enter in amount for one entry

This is a situation where a transaction was entered on the correct sides of the correct accounts but with the wrong amount for one account. For example, cash received from Pinto $250 was correctly debited to cash account but credited to Pinto’s account as $200.

v.                   Error in calculation

The trial balance is prepared from account balances. These balances may at times be wrongly calculated.

Sometimes, the balance calculated may be bigger than the real balance. It is, then, said that the balance is overstated or overcast.

At other times, the balance calculated may be smaller than the real balance. It is, then, said that the balance is understated or under cast.

In trial balance:

vi.                 Error in amount

In this case, the balances are correctly calculated in the ledger but wrongly entered in the trial balance. For example, the balance of $1100 of the furniture account entered as         $1000 in the trial balance.

vii.               Omission of a balance

This is where the balance of a ledger has been omitted from the trial balance

Ahmed kandil
par Ahmed kandil , Cost Controller , Battour Holding Cpompany

trial balance ensure that entries record correctly 

Vinod Jetley
par Vinod Jetley , Assistant General Manager , State Bank of India

A trial balance is a list of all the General ledger accounts (both revenue and capital) contained in the ledger of a business. This list will contain the name of the nominal ledger account and the value of that nominal ledger account. The value of the nominal ledger will hold either a debit balance value or a credit balance value. The debit balance values will be listed in the debit column of the trial balance and the credit value balance will be listed in the credit column. The profit and loss statement and balance sheet and other financial reports can then be produced using the ledger accounts listed on the trial balance. The name comes from the purpose of a trial balance which is to prove that the value of all the debit value balances equal the total of all the credit value balances. Trialing, by listing every nominal ledger balance, ensures accurate reporting of the nominal ledgers for use in financial reporting of a business's performance. If the total of the debit column does not equal the total value of the credit column then this would show that there is an error in the nominal ledger accounts. This error must be found before a profit and loss statement and balance sheet can be produced. The trial balance is usually prepared by a bookkeeper or accountant who has used daybooks to record financial transactions and then post them to the nominal ledgers and personal ledger accounts. The trial balance is a part of the double-entry bookkeeping system and uses the classic 'T' account format for presenting values.

Mohammed Rahmathullah Khan
par Mohammed Rahmathullah Khan , Help Desk Operator , Engie Solutions Middle East

B) Errors of omission.

athira vr
par athira vr , Audit Associate , kpmg

Compensating Error. The Trial Balance reveles the error of compensating and wrong totals and wrong amounts.

georgei assi
par georgei assi , مدير حسابات , المجموعة السورية

The Answer B

Utilisateur supprimé
par Utilisateur supprimé

agreed with all

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