Page 146 - DMGT104_FINANCIAL_ACCOUNTING

Financial Accounting

Notes (c) Error of Commission
(d) Compensating Error.
13. Sales day book overcast by 150.
(a) Error of Omission

(b) Error of Commission
(c) Compensation Error
(d) Error of principle.
14. Purchase of Furniture is debited to Purchases A/c.

(a) Error of Omission
(b) Error of Principle
(c) Error of Commission
(d) None of the above.

15. Bad debts recovered from a debtor are credited to his account.
(a) Error of Omission
(b) Error of Commission
(c) Error of Principle

(d) Compensating Error.

7.4 Summary

 Trial Balance is a list of accounting balances and their names; of the enterprise during the
specified period which includes debit and credit balances of the various balanced ledger
accounts out of the journal entries.
 Purposes of preparing the Trial Balance are to prepare a statement of disclosure of final
accounting balances of various ledger accounts on a particular date.
 There can be certain errors in recording the accounting transactions in primary and
secondary books of accounts.

 The following errors cannot be detected by the trial balance means in spite of agreeing the
totals of debit side and credit side

 Error of omission
 Error of commission
 Error of principle
 Compensating error

 The errors which can be located in the trial balance are wrong total, balancing error,
positioning error etc.
 Sometimes, it is not possible to point out errors easily, then the difference is put to an
account, known as suspense account.

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