Chapter 2: Trial Balance and correction of errors

1. Which of the following is the main purpose of preparing a trial balance.

2. Which of the following statements is/are the limitations of the trial balance.
a) It identifies only some of the errors, particularly errors in double entry.
b) Its preparation is a lengthy and complicated process
c) It is difficult to understand by non-technical people
d) It is the starting point for all the preparation of year end accounts
Answer: a

3. An error of commission is where a transaction has been recorded in the correct category of
account, but in the wrong account. Is the above mentioned statement true or false?
Answer: True

4. Rita has incorrectly recorded a credit entry for sale in the trade payables account. Which error
has occurred?
a) Error of Principle
b) Error of Commission
c) Error of Omission
d) Error of Original Entry
Answer: a

5. Maria posted an amount of $780 as $870 in one side of the entry (either debit or credit). What
type of error has occurred and will the error be picked up by the trial balance?
a) Error of partial omission and will be picked up by the trial balance
b) Error of partial omission and will not be picked up by the trial balance
c) Error of transposition and will be picked up by the trial balance
d) Error of transposition and will not be picked up by the trial balance
Answer: c

6. Watson recorded a credit sales transaction incorrectly as: Dr Sales $400 Cr Receivables $400.
What type of error has occurred?
a) Transposition error
b) Error of complete omission
c) Error of Complete reversal
d) Error of commission
Answer: c
7. Tina’s trial balance failed to agree, hence a suspense account was opened. The errors included in
the trial balance were:
- An electricity bill of $430 had been recorded in the Electricity account as $340
- Discount of $60 given by a supplier had been debited to discounts allowed and
- Interest received of $90 had been entered in the bank account only.
What was the original balance on the suspense account?
a) $120 Debit
b) $120 Credit
c) $60 Debit
d) $60 Credit
Answer: b

8. If the total of the debit balances equals the total of the credit balances, no errors have been
made in posting to the general ledger. Is the above statement true or false?
Answer: False

9. A sale of $450 has been incorrectly debited to the sales account. What will be the correcting
journal entry?
a) Debit Suspense account $450; Credit Sales $450
b) Debit Sales account $450, Credit Sales $450
c) Debit Suspense account $900, Credit Sales $900
d) Debit Sales account $900, Credit Suspense account $900
Answer: c

10. Which of the following will not cause an entry to be made in a suspense account?
a) Capital introduced on the debit side of the trial balance
b) Discounts received shown on the credit side of the trial balance.
c) Sales of $100,000 omitted from the trial balance
d) Non-current asset recorded as a non-current liability.
Answer: b

11. At 30 June 2017, the debit side of Chris’s trial balance exceeded the credit side by $500. A
suspense account was opened and the errors discovered were:
- A purchase invoice of $560 has been debited at $650 to the purchases account and
- A cash sale of $770 has been omitted from the accounting records.
What is the balance on suspense account if the errors discovered above are corrected?
a) $590 Dr
b) $590 Cr
c) $110 Cr
d) $410 Cr
Answer: d

12. Tony made one error when he posted the total value of invoices from the purchase daybook to
the general ledger. He posted $274,865 to the debit side of the purchases account. The correct
total was $274,685. How is the trial balance affected by this error?
 a) The total of the debit balances and the total of the credit balances will agree, but will be
overstated
b) The total of the debit balances and the total of the credit balances will agree, but will be
understated
c) The total of the debit balances will exceed the total of the credit balances
d) The total of the credit balances will exceed the total of the debit balances
Answer: c

13. A suspense account shows a credit balance of $130. This balance could be due to which of the
following?
a) Omitting a sale of $130 from the receivables account
b) Recording a purchase of $130 twice in the purchases account
c) Failing to write off a bad debt of $130
d) Recording an electricity bill paid of $65 by debiting the bank account and crediting the
electricity account
Answer: b

14. When Nicola extracted her trial balance, the total of the debit balances exceeded the total of the
credit balances by $1,000. She opened a suspense account to make the two totals equal. She
then discovered that an invoice received for property repairs for $1,500 was entered as $500 on
the credit side of the property repairs account. What is the revised balance on the suspense
account when Nicola corrects this error?
a) $Nil
b) $2000 Dr
c) $2000 Cr
d) $3000 Cr
Answer: d

15. When Keith's trial balance was extracted, a suspense account was opened as the total of the
debit column was $400 greater than the total of the credit column. Keith then found that a cash
purchase of stationery for $200 was correctly entered in the cash account, but was entered on
the wrong side of the stationery account. When the error is corrected, what is the balance on the
suspense account?
a) $Nil
b) $200
c) $600
d) $800
Answer: d