Quiz on Correction of Accounting Errors

What is the main purpose of a suspense account?

• To summarize financial statements

• To track cash flow

• To record all transactions

• To balance the trial balance temporarily

Which of the following is an example of an error affecting the trial balance?

• Transaction recorded in the wrong account

• Transaction recorded twice on the same side

• Transaction recorded with the wrong amount

• Transaction omitted from the records

What type of error occurs when a transaction is recorded in violation of accounting principles?

• Error of omission

• Error of commission

• Error of principle

• Error of original entry

If a cash sale of RO 400 is recorded as RO 500, what type of error is this?

• Error of omission

• Error of original entry

• Error of commission

• Error of principle

What is the first step in correcting an accounting error that affects the trial balance?

• Recalculate the trial balance

• Create a suspense account

• Post the correction

• Identify the error

Which of the following errors does NOT affect the trial balance?

• Transaction recorded twice

• Understatement of an account

• Transaction recorded only once

• Error of principle

What is the effect of a compensating error?

• It is easy to identify

• It affects only one account

• It cancels out another error

• It causes the trial balance to be out of balance

If a transaction is recorded in the wrong personal account but the correct type of account, what type of error is this?

• Error of original entry

• Error of principle

• Error of commission

• Error of omission

What should be done after identifying an error in the accounting records?

• Ignore it

• Create a new account

• Make a correcting entry

• Recalculate all accounts

Which of the following is an example of an error of original entry?

• Posting the wrong amount to both accounts

• Reversing the debit and credit

• Recording a transaction in the wrong account

• Failing to record a transaction