Rectification of Errors | Aster Classes

Chapter 8: Rectification of Errors

Answer in One Sentence:

1.What is meant by rectification of errors?

SOLUTION

Mom the book of accounts, when errors are identified (to confirm accuracy in the books of accounts) and entries are passed to rectify that errors, it is known as rectification of errors.

2.What is meant by error of principle?

SOLUTION

In the books of accounts when transactions are recorded without following the accounting principles and/or rules, is known as error of principle.

3.What is meant by error of partial omission?

SOLUTION

When a transaction to be recorded in the books of account is partially omitted and due to which trial balance does not get tallied, it is known as error of partial omission.

4.What is meant by error of complete omission?

SOLUTION

When a transaction to be recorded in the books of accounts is completely omitted and due to which agreement of trial balance does not affect, it is known as error of complete omission.

5.What are compensating errors?

SOLUTION

When two or more errors, identified from books of accounts are in such a way that the net effect of these errors, on the debit and on the credit sides of accounts is nil, such errors are known as compensating errors.

Give one word/term or phrase for the following statement:

1.Taking the total more while closing books of accounts.

SOLUTION

Taking the total more while closing books of accounts. – Overcasting.

2.Errors which affect the agreement of Trial Balance.

SOLUTION

Errors which affect the agreement of Trial Balance. – One-sided errors

3.Error which arises when a transaction is partially or completely omitted to be recorded in the books of accounts.

SOLUTION

Error which arises when a transaction is partially or completely omitted to be recorded in the books of accounts. Error of omissions

4.Transactions recorded due to violating the accounting principles.

SOLUTION

Transactions recorded due to violating the accounting principles. – Error of principle

5.Accounts to which difference in Trial Balance is transferred.

SOLUTION

Accounts to which difference in Trial Balance is transferred. – Suspense account

6.Error in which the effect of one mistake is nullified by another mistake.

SOLUTION

Error in which the effect of one mistake is nullified by another mistake. – Compensating Error

7.Error which are not disclosed by the Trial Balance.

SOLUTION

Error which are not disclosed by the Trial Balance. – Two sided errors

8.Errors of incorrect entries or wrong posting.

SOLUTION

Errors of incorrect entries or wrong posting.Error of commission

Select the most appropriate alternative from those given below and rewrite the sentence:

1.Rectification entries are passed in ______

  • Journal Proper
  • Ledger
  • Balance sheet
  • Cash Book

2.The type of error for which journal entry is always required for rectification ______

  • Over  casting
  • one sided error
  • under casting
  • two sided error

3.Errors occurred due to wrong posting are called as errors of______

  • principle
  • commission
  • compensating
  • omission

4.If transaction is totally omitted from the Books, it is called ______

  • Error of recording
  • Error of omission
  • Error of principle
  • Error of commission

5.Suspense Account is opened when ____ does not tally

  • Balance sheet
  • Trading account
  • Profit and Loss
  • Trial Balance

State whether the following statement is True or False with reason:

1.Trial Balance is prepared from the balance of ledger accounts.

Options
  • True
  • False

SOLUTION

This statement is True.

Basic aim of preparing a trial balance is to check arithmetic accuracy of transactions recorded in a journal, posting them into the ledger and balancing of the ledger accounts.

2.A Trial Balance can agree in spite of certain errors.

Options
  • True
  • False

SOLUTION

This statement is True.

Certain errors, like Error of Complete omission, Error of principle, or Compensating error, due to which a trial balance can agree because there are two sided errors.

3.Rectification entries are passed in Cash Book.

Options
  • True
  • False

SOLUTION

This statement is False.

In a special subsidiary book known as journal proper, rectification entries are to be passed.

4.There is no need to open a Suspense Account if the Trial Balance agrees.

Options
  • True
  • False

SOLUTION

This statement is True.

When the trial balance agrees, it means debit side total is equal to the credit side total of balances of Ledger accounts. So, we can say that there is no need to open a Suspense Account if the trial balance agrees.

5.All the errors can be rectified only through Suspense Account.

Options
  • True
  • False

SOLUTION

This statement is False.

When the debit side total is not equal to the credit side total of balances of ledger accounts, one side errors are identified and its rectification is completed through suspense account. So, we can say that all the errors can’t be rectified only through suspense account.

Do you agree or disagree with the following statement:

1.The unintentional omission or commission of amounts and accounts while recording the transactions are known as an error.

  • Agree
  • Disagree

2.The errors committed due to wrong recording, wrong posting, wrong totalling, wrong balancing, wrong calculations are known as Arithmetical errors.

  • Agree
  • Disagree

3.When one or more debit errors happen to equal one or more credit errors it is said to be a Compensating error.

  • Agree
  • Disagree

4.The agreement of Trial balance is not affected when a transaction is not recorded at all in the original Books.

  • Agree
  • Disagree

5.When a transaction is not recorded according to the principles of accounting it is known as Compensating errors.

  • Agree
  • Disagree

Complete the following sentence:

1.______ is assured only when there are no errors in the books of accounts.

SOLUTION

Accuracy is assured only when there are no errors in the books of accounts.

2.Transactions recorded in contravention of the accounting principles are known as ______

SOLUTION

Transactions recorded in contravention of the accounting principles are known as Errors of Principle.

3.______ entry depends generally on when the error is detected.

SOLUTION

Rectifying entry depends generally on when the error is detected.

4.Temporary account opened to rectify the entry is known as ______

SOLUTION

Temporary account opened to rectify the entry is known as Suspense Account.

5.Errors are caused due to ______ recording of transactions.

SOLUTION

Errors are caused due to wrong recording of transactions.

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