Accounting Chapter 3 - Past Year MCQ

Which statement about a trial balance is correct?

• It assists in locating arithmetical errors in the book-keeping records.
• It is proof that the entries in the ledger accounts are free from error.
• It reveals all book-keeping errors.
• It shows ledger account errors only.

What is an example of a compensating error?

• A payment for office equipment repairs was debited to the office equipment account.
• A purchase of goods from C Jones was credited to the account of C Johns.
• The sale of goods, $65, to A Aziz was entered in the books as $56.
• The wages account was undercast by $100 and the rent account was overcast by $100.

The total of the debit column of a trial balance was more than the total of the credit column. One account balance had been entered in the wrong column. Which one was it?

• cash
• discount received
• drawings
• irrecoverable debts

A sales invoice for $800 was incorrectly recorded in the sales journal as $1800. How did this error affect the trial balance?

• The trial balance balanced but both totals were overstated by $1000.
• The trial balance balanced but both totals were understated by $1000.
• The trial balance did not balance because the credits were overstated by $1000.
• The trial balance did not balance because the debits were understated by $1000.

The totals of a trial balance agreed but it was found that the purchase of office equipment had been debited to office expenses account. Which type of error has been made?

• commission
• compensating
• original entry
• principle

Which error does not affect the balancing of a trial balance?

• Cash received from Smith was debited to Smythe’s account.
• Motor vehicle expenses were debited to the motor vehicles account.
• One page of the sales journal was overcast.
• Purchases returns were omitted from the purchases ledger.

An invoice for the purchase of goods on credit, $980, was incorrectly recorded in the purchases journal as $890. Which type of error was made?

• commission
• complete reversal
• original entry
• principle

Which account may appear as a credit balance in a trial balance?

• carriage outwards
• discount received
• drawings
• inventory

Which statement describes the purpose of a trial balance?

• It checks the arithmetical accuracy of the double entry.
• It ensures the ledger accounts contain no errors.
• It indicates areas where errors have arisen.
• It prevents errors from occurring.

Which error would not be revealed by a trial balance?

• completely omitting a transaction
• incorrectly balancing an account
• making only one entry for a transaction
• recording a transaction twice on the same side