Correction of errors MC quiz

What is the primary purpose of a journal in accounting?

• To record regular transactions
• To replace the ledger
• To act as a book of prime entry for non-regular transactions
• To calculate profit and loss

Answer explanation

Journals are used for non-regular transactions and act as a book of prime entry.

Which of the following is an example of an error of omission?

• Entering £100 as £10
• Forgetting to record a sales invoice
• Posting to the wrong account
• Recording two debits instead of a debit and credit

Answer explanation

An error of omission occurs when a transaction is completely left out of the books.

What type of error occurs when the correct amount is posted to the wrong person’s account?

• Error of principle
• Error of omission
• Error of commission
• Error of original entry

Answer explanation

Error of commission involves posting the correct amount to the wrong person's account.

Which error type involves entering a transaction in the wrong class of account?

• Error of commission
• Error of principle
• Error of omission
• Compensating error

Answer explanation

Error of principle is when an item is posted to the wrong class of account.

What is a compensating error?

• An error that is corrected immediately
• An error that causes the trial balance not to balance
• Two errors that cancel each other out
• An error made in the suspense account

Answer explanation

Compensating errors cancel each other out and do not affect the trial balance.

Which of the following errors will NOT be revealed by a trial balance?

• Recording two debits
• Error of omission
• Error in calculating balances
• Error in transferring balances

Answer explanation

Trial balance cannot detect errors where both debit and credit are missing.

What is the purpose of a suspense account?

• To record regular transactions
• To temporarily hold differences in the trial balance
• To record VAT adjustments
• To reconcile bank statements

Answer explanation

Suspense accounts temporarily hold differences when the trial balance doesn't match.

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

• Posting £89 as £98
• Forgetting to record a transaction
• Posting to the wrong account
• Recording two credits

Answer explanation

Error of original entry involves posting an incorrect figure on both sides.

What is the correct journal entry to correct a complete reversal of entries?

• Debit and credit the same account
• Reverse the incorrect entries and post the correct ones
• Ignore the error if the trial balance balances
• Use a suspense account

Answer explanation

Reversal of entries means correct accounts but wrong sides; needs reversing.

Which error type involves entering the correct accounts but on the wrong sides?

• Error of principle
• Error of commission
• Complete reversal of entries
• Error of omission

Answer explanation

Complete reversal means correct accounts but wrong sides of the entry.