trial balance and errors

Question 1

trial balance and errors

what is a trial balance?

Answer 1

a financial report showing all the balances in the ledgers, and its debit or credit value

Question 2

trial balance and errors

why is a trial balance used?

Answer 2

to see if debit balances are equal to credit balances

Question 3

trial balance and errors

TRUE OR FALSE: the trial balance can only be prepared at the end of the financial year

Answer 3

FALSE
(can be prepared at any time)

Question 4

trial balance and errors

TRUE OR FALSE: the trial balance is prepared once double entry book-keeping has been completed and balanced

Answer 4

TRUE

Question 5

trial balance and errors

what happens once the trial balance balances?

Answer 5

the financial statements

Question 6

trial balance and errors

what is the layout of the trial balance?

Answer 6

• name of account
• debit
• credit

Question 7

trial balance and errors

what errors could be made in the trial balance?

Answer 7

• columns added up incorrectly
• amounts omitted
• amount copied across incorrectly
• item in the incorrect column

Question 8

trial balance and errors

what errors in the double entry will effect the trial balance?

Answer 8

• incorrect posting
• amount entered incorrectly

Question 9

trial balance and errors

what is a suspense account?

Answer 9

an account used when the two columns of the trial balance don’t balance

Question 10

trial balance and errors

TRUE OR FALSE: the suspense account is used to correct errors in the trial balance

Answer 10

TRUE

Question 11

trial balance and errors

what type of account is a suspense account?

Answer 11

TEMPORARY
(doesn’t appear in the financial statements)

Question 12

trial balance and errors

what are the four steps to using a suspense account?

Answer 12

• add up debit and credit column totals
• calculate the difference between these totals
• add ‘suspense’ to the list of accounts in the trial balance
• place calculated difference into the column with the lowest total value

Question 13

trial balance and errors

where to put the trial balance difference in the suspense account?

Answer 13

the same debit or credit side that holds the lowest value

Question 14

trial balance and errors

how to use the suspense account to correct an error?

Answer 14

• gather incorrect accounts
• put ‘balance b/d’ into the appropriate accounts
• identify which double entry needs to be posted
• post other side of double entry to suspense account

Question 15

trial balance and errors

what errors are revealed by the trial balance?

Answer 15

• transposition
• addition
• unequal posting
• partial omission

(TAUP)

Question 16

trial balance and errors

what errors are not revealed by the trial balance?

Answer 16

• compensating error
• omission
• principle
• commission
• original entry
• reversal of entries

Question 17

trial balance and errors

what is a compensating error?

Answer 17

one error is cancelled out by another equal error

Question 18

trial balance and errors

what is the error of omission?

Answer 18

an entry has been completely left out

Question 19

trial balance and errors

what is the error of principle?

Answer 19

the amount has been entered into the wrong type of account

Question 20

trial balance and errors

what is the error of commission?

Answer 20

amount entered into the wrong persons account, but the right type

Question 21

trial balance and errors

what is the error of original entry?

Answer 21

the wrong amount has been entered in two accounts

Question 22

trial balance and errors

what is the error of reversal of entries?

Answer 22

a debit and credit balance has been reversed in the account

Question 23

trial balance and errors

what is the error of transposition?

Answer 23

figures have been entered the wrong way around

Question 24

trial balance and errors

what is the error of addition?

Answer 24

one account has not been added up correctly

Question 25

**trial balance and errors** what is the error of unequal posting?

Answer 25

two debit entries or two credit entries of different amounts

Question 26

**trial balance and errors** what is the error of partial omission?

Answer 26

half of the transaction has been missed out

Question 27

**trial balance and errors** TRUE OR FALSE: if i enter a suspense amount on the **credit** side of an account, it will be on the **debit** side of the suspense account

Answer 27

TRUE (all suspense amounts are flipped)