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Test: Rectification Of Errors - 5 - SSC CGL MCQ


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20 Questions MCQ Test SSC CGL Tier 2 - Study Material, Online Tests, Previous Year - Test: Rectification Of Errors - 5

Test: Rectification Of Errors - 5 for SSC CGL 2024 is part of SSC CGL Tier 2 - Study Material, Online Tests, Previous Year preparation. The Test: Rectification Of Errors - 5 questions and answers have been prepared according to the SSC CGL exam syllabus.The Test: Rectification Of Errors - 5 MCQs are made for SSC CGL 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Rectification Of Errors - 5 below.
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Test: Rectification Of Errors - 5 - Question 1
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Which of the following is not a type of errors of commission

Detailed Solution for Test: Rectification Of Errors - 5 - Question 1
Types of Errors of Commission:

  • Error of recording: This occurs when the wrong amount is recorded in the books of original entry. It may involve an incorrect figure, a transposition of digits, or a mistake in decimal placement.

  • Error of posting: This occurs when an amount is posted to the wrong account in the general ledger. It may result from a mistake in the account number or a misunderstanding of the account classification.

  • Error of casting: This occurs when the total of a column is calculated incorrectly. It may be due to a mathematical error or a misreading of figures.


Error of principle:

  • This is not a type of error of commission. It refers to a mistake in the application of accounting principles or concepts. For example, recording a personal expense as a business expense or failing to recognize revenue when it is earned.


Therefore, the answer is A: Error of principle is not a type of error of commission.
Test: Rectification Of Errors - 5 - Question 2
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Debit balance of suspense account will be at _____ Credit balance will be at _____ side of balance sheet

Detailed Solution for Test: Rectification Of Errors - 5 - Question 2

The correct answer is option B: Assets, liabilities.
Explanation:
The suspense account is a temporary account used to record transactions when there is uncertainty or incomplete information about the correct accounting treatment. It is used to temporarily hold the difference between the debits and credits until the correct classification or account is determined.
Debit balance of suspense account:
When the total debits in the suspense account exceed the total credits, it results in a debit balance in the suspense account. This indicates that there are more debits than credits in the account. Since the suspense account represents an unresolved difference, the debit balance is shown on the assets side of the balance sheet.
Credit balance of suspense account:
When the total credits in the suspense account exceed the total debits, it results in a credit balance in the suspense account. This indicates that there are more credits than debits in the account. Since the suspense account represents an unresolved difference, the credit balance is shown on the liabilities side of the balance sheet.
Therefore, the correct answer is option B: Assets, liabilities. The debit balance of the suspense account will be shown on the assets side, while the credit balance will be shown on the liabilities side of the balance sheet.
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Test: Rectification Of Errors - 5 - Question 3
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The disagreements of trial balance indicated that an _____ has been committed

Detailed Solution for Test: Rectification Of Errors - 5 - Question 3
Explanation:
The trial balance is a statement that lists all the ledger accounts and their balances. It is used to ensure that the total debits equal the total credits, thereby verifying the accuracy of the accounting records.
When there are disagreements or discrepancies in the trial balance, it indicates that an error has been committed in the accounting process. This error could be in the recording, posting, or calculation of transactions.
The correct option for the given question is option C: Error.
Reasoning:
- Rectification refers to the act of correcting or adjusting an error. It is not the correct answer as it does not indicate the presence of an error.
- Fault implies a mistake or wrongdoing. While it could be related to error, it is not a specific term used in accounting to describe disagreements in the trial balance.
- None indicates that there are no errors, which is incorrect as the question clearly mentions disagreements.
Therefore, the correct answer is option C: Error.
Test: Rectification Of Errors - 5 - Question 4
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Time of depiction of an error mean
Detailed Solution for Test: Rectification Of Errors - 5 - Question 4
Time of depiction of an error mean:


There are different stages at which errors can be detected in accounting. The time of depiction of an error refers to the stage at which the error is discovered. The options provided are:
A. Error detected after the preparation of final accounts:
- Final accounts are prepared at the end of the accounting period, and they include the financial statements such as the income statement and balance sheet.
- If an error is detected after the preparation of final accounts, it means that the error was not identified during the process of preparing the financial statements.
- Examples of errors that could be detected at this stage include mathematical mistakes, incorrect classification of items, or omitted transactions.
B. Error detected after the preparation of trial balance:
- The trial balance is prepared before the final accounts and is used to ensure that the debits and credits in the accounting records are in balance.
- If an error is detected after the preparation of the trial balance, it means that the error was not identified during the process of preparing the trial balance.
- Examples of errors that could be detected at this stage include transposition errors, posting errors, or errors in the opening balances.
C. Error detected before the preparation of trial balance:
- This refers to errors that are identified during the process of preparing the trial balance.
- Examples of errors that could be detected at this stage include errors in the recording of transactions, errors in the ledger accounts, or errors in the calculation of account balances.
D. All of these:
- This option means that errors can be detected at any stage of the accounting process, including after the preparation of final accounts and trial balance.
Conclusion:
- The correct answer is D, as errors can be detected at any stage of the accounting process.
- It is important for accountants to carefully review and reconcile their work at each stage to ensure that errors are identified and corrected in a timely manner.
Test: Rectification Of Errors - 5 - Question 5
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Trial balance is affected by
Detailed Solution for Test: Rectification Of Errors - 5 - Question 5
Trial balance is affected by:
There are two types of errors that can affect the trial balance - one-sided errors and two-sided errors.
One-sided errors:
- One-sided errors affect only one side of the trial balance, either the debit side or the credit side. These errors can occur due to mistakes in recording transactions or posting entries. Examples of one-sided errors include:
- Omission of a transaction from the books of accounts
- Incorrect recording of a transaction
- Posting an entry to the wrong account
Two-sided errors:
- Two-sided errors affect both the debit and credit sides of the trial balance. These errors occur when the debit and credit amounts are not equal in the accounting entries. Examples of two-sided errors include:
- Incorrect totaling or balancing of subsidiary books
- Incorrect calculation of discounts or allowances
- Errors in transferring balances from one account to another
Impact on trial balance:
- When one-sided errors occur, the trial balance will not balance because the total of the debit side will not equal the total of the credit side. The trial balance will show a difference or imbalance.
- When two-sided errors occur, the trial balance may still balance because the total of the debit side can equal the total of the credit side, even though individual accounts may have incorrect balances. However, the financial statements prepared using the incorrect balances will be inaccurate.
Therefore, the correct answer is Option A: One sided error.
Test: Rectification Of Errors - 5 - Question 6
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Suspense account is opened when ____ does not tally
Detailed Solution for Test: Rectification Of Errors - 5 - Question 6

When the trial balance does not tally, a suspense account is opened to temporarily hold the difference until it can be resolved. Here is a detailed explanation:
1. Trial Balance:
- The trial balance is a statement that lists all the debit and credit balances of all the ledger accounts.
- It is prepared to check the arithmetical accuracy of the accounts and ensure that the total debits equal the total credits.
2. Tallying:
- The trial balance should ideally tally, which means that the total debits should be equal to the total credits.
- This indicates that the books of accounts are balanced and there are no errors in the recording and posting of transactions.
3. Suspense Account:
- If the trial balance does not tally, it means that there is an error in the books of accounts.
- To temporarily hold the difference and continue the accounting process, a suspense account is opened.
- The suspense account is a temporary account that is used to record the difference between the debits and credits until the error is identified and rectified.
4. Error Identification:
- Once the suspense account is opened, efforts are made to identify the error and rectify it.
- The error can be located by rechecking the ledger accounts, subsidiary books, and other relevant records.
- Once the error is found, it is corrected, and the necessary adjustments are made in the accounts.
5. Resolution:
- After the error is rectified, the suspense account is closed by transferring the balance to the appropriate accounts.
- If the suspense account has a debit balance, it is transferred to the debit side of the relevant account.
- If the suspense account has a credit balance, it is transferred to the credit side of the relevant account.
In conclusion, a suspense account is opened when the trial balance does not tally. It serves as a temporary holding account until the error is identified and rectified.
Test: Rectification Of Errors - 5 - Question 7
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Which of the following is not an error of principle
Detailed Solution for Test: Rectification Of Errors - 5 - Question 7
Error of Principle:
An error of principle refers to a mistake made in recording a transaction that violates the fundamental principles of accounting. It involves incorrectly classifying or recognizing a transaction in the financial records.
Analysis of the given options:
To determine which option is not an error of principle, let's analyze each option:
A: Purchase of furniture debited to purchase account
- This is an error of principle as the purchase of furniture should be debited to the furniture account, not the purchase account.
B: Repair or the overhauling of machinery purchased debited to repairs account
- This is an error of principle as the repair or overhaul of machinery should be debited to the machinery account, not the repairs account.
C: Cash paid to Karan posted to salary
- This is not an error of principle as the cash paid to Karan can be considered as a salary expense.
D: Sale of old car credited to sales account
- This is an error of principle as the sale of old car should be credited to the fixed assets disposal account, not the sales account.
Conclusion:
Based on the analysis, the option that is not an error of principle is C: Cash paid to Karan posted to salary.
Test: Rectification Of Errors - 5 - Question 8
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Which of the following is not an error of commission
Detailed Solution for Test: Rectification Of Errors - 5 - Question 8
Answer:
Error of commission: An error of commission occurs when a transaction is recorded incorrectly, resulting in an incorrect entry in the accounting records. It involves taking an action that should not have been taken or recording something that should not have been recorded.
Errors of commission:
- A: Credit sales to Pawan Rs.5000 credited to his account
- B: Wrong balancing of machinery account
- C: Overcasting of sales book
Not an error of commission:
- D: Cash sales not recorded in cash book
Explanation:
The correct answer is D because not recording cash sales in the cash book is an error of omission, not an error of commission. An error of omission means that a transaction or event is completely omitted from the accounting records. In this case, the cash sales were simply not recorded, which is an omission rather than a commission error.
Test: Rectification Of Errors - 5 - Question 9
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Which of the following error will be rectified through suspense account
Detailed Solution for Test: Rectification Of Errors - 5 - Question 9
Error Rectified through Suspense Account
The error that can be rectified through a suspense account is option C: Purchase return book undercast by 1000.
Explanation:
When there is an error in the bookkeeping process, and the exact correction cannot be determined, a suspense account is used to temporarily hold the difference. Here's how the error in option C can be rectified through a suspense account:
1. Identify the error: The purchase return book has been undercast by 1000, meaning that the total amount of purchase returns recorded is 1000 less than the actual amount.
2. Create a suspense account: A suspense account is set up to hold the difference until the error is resolved. The amount undercasted, in this case, 1000, is debited to the suspense account.
3. Rectify the error: The next step is to investigate and correct the error. Once the correct amount of the purchase return is determined, the necessary adjustments are made.
4. Adjust the suspense account: Once the error is rectified, the suspense account is adjusted accordingly. The correct amount of the purchase return is credited to the suspense account, balancing out the entries.
5. Transfer the balance: After the suspense account is adjusted, the balance is transferred to the appropriate ledger accounts. In this case, the corrected purchase return amount is transferred to the respective account.
By using a suspense account, the error in option C can be rectified temporarily until the correct amount of the purchase return is determined and adjusted.
Test: Rectification Of Errors - 5 - Question 10
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Trial balance is equal from both sides but still there is some error. It indicate that:
Detailed Solution for Test: Rectification Of Errors - 5 - Question 10
Trial balance is equal from both sides but still there is some error. It indicates that:
There may be two sided and one sided error in the book.
Explanation:
- The trial balance is a statement that lists all the general ledger accounts and their respective debit or credit balances.
- The purpose of the trial balance is to ensure that the total debits equal the total credits, which helps to verify the accuracy of the bookkeeping entries.
- However, even if the trial balance is balanced, it does not guarantee that there are no errors in the bookkeeping.
- If there is still an error despite the trial balance being equal from both sides, it indicates that there may be errors that have offset each other, resulting in a balanced trial balance.
- These errors can be categorized as two-sided errors and one-sided errors.
- Two-sided errors occur when both the debit and credit entries are incorrect, but the errors cancel each other out, resulting in a balanced trial balance.
- One-sided errors occur when either the debit or credit entry is incorrect, but the error is compensated by an equal and opposite error in another account, again resulting in a balanced trial balance.
- It is important to note that a balanced trial balance does not guarantee the absence of errors. It only indicates that the debits and credits are equal, but errors can still exist within the individual accounts.
- To identify and correct these errors, a thorough review of the individual transactions and account balances is necessary.
In conclusion, if the trial balance is equal from both sides but there is still an error, it suggests that there may be two-sided and one-sided errors in the book. Further investigation and analysis of the individual accounts are required to identify and rectify these errors.
Test: Rectification Of Errors - 5 - Question 11
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If wages paid for construction of building are debited to wages account. It is
Detailed Solution for Test: Rectification Of Errors - 5 - Question 11
Explanation:
When wages paid for the construction of a building are debited to the wages account, it is considered an error of principle. Here's a detailed explanation:
- Error of principle: An error of principle occurs when a transaction is recorded in an incorrect account due to a failure to follow the fundamental principles of accounting. It involves recording a transaction in a way that goes against the established accounting principles or standards.
- In this case, debiting the wages account for the construction of a building is not in accordance with the principle of proper classification and separation of expenses. Wages paid for the construction of a building should be recorded as part of the building cost, not as wages expense.
- Proper treatment: The wages paid for the construction of a building should be capitalized as part of the building cost and recorded in the appropriate asset account, such as "Building" or "Construction in Progress" account.
- By debiting the wages account, the error misrepresents the true nature of the transaction and distorts the financial statements. It can lead to inaccurate financial reporting and misinterpretation of the company's financial performance.
- Correction: To correct this error, the entry should be reversed by debiting the building account and crediting the wages account. This will rectify the misclassification of the expense and ensure accurate financial reporting.
In conclusion, when wages paid for the construction of a building are debited to the wages account, it is an error of principle as it violates the fundamental accounting principle of proper classification and separation of expenses.
Test: Rectification Of Errors - 5 - Question 12
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Trial balance is
Detailed Solution for Test: Rectification Of Errors - 5 - Question 12
Trial balance is:
- A principle book: No, trial balance is not a principle book. It is a financial statement that lists all the accounts and their balances at a specific point in time.
- A subsidiary book: No, trial balance is not a subsidiary book. Subsidiary books are used to record specific types of transactions, such as cash receipts or sales. Trial balance is a summary of all accounts.
- An account: No, trial balance is not an account. It is a summary of all accounts in a company's general ledger.
- None: No, trial balance is not none. It is a crucial tool in the accounting process that helps ensure the accuracy of the financial statements.
Therefore, the correct answer is A: A principle book.
Test: Rectification Of Errors - 5 - Question 13
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A trial balance is prepared
Detailed Solution for Test: Rectification Of Errors - 5 - Question 13
Explanation:
A trial balance is a list of all the general ledger accounts containing their respective debit and credit balances. It is prepared to ensure that the total debits equal the total credits in the accounting system and to identify any errors or discrepancies before the financial statements are generated. The correct timing for preparing a trial balance is after posting to the ledger is complete and accounts have been balanced.
The steps involved in the preparation of a trial balance are as follows:
1. Recording transactions:
- All financial transactions are initially recorded in the subsidiary books, such as the cash book, sales book, purchases book, etc.
2. Posting to the ledger:
- The transactions recorded in the subsidiary books are then transferred to the general ledger accounts.
- Each transaction is posted to the appropriate accounts, with debits on the left side and credits on the right side.
3. Balancing the accounts:
- After posting all transactions, each account in the ledger is balanced by calculating the total debits and credits.
- The balances are then recorded in the trial balance.
4. Preparing the trial balance:
- The trial balance is prepared by listing all the general ledger accounts and their respective debit and credit balances.
- The total debits and credits are calculated and compared to ensure they are equal.
- If the totals match, it indicates that the ledger accounts have been accurately recorded and balanced.
Therefore, the correct answer is option D: After posting to the ledger is complete and accounts have been balanced.
Test: Rectification Of Errors - 5 - Question 14
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If suspense account does balance even after rectification of error it implies that
Detailed Solution for Test: Rectification Of Errors - 5 - Question 14

To understand why a suspense account balance even after rectification of error implies that there are some one side errors only in the books yet to be located, let's break down the concept and reasoning behind it:
1. What is a suspense account?
- A suspense account is a temporary account used to hold transactions or balances that cannot be immediately classified or rectified.
- It is created when there is an error or discrepancy in the books of accounts, and the exact correction cannot be determined at that time.
2. Why is a suspense account created?
- A suspense account is created to prevent the imbalance caused by an error from affecting the overall accuracy of the financial statements.
- It allows the books to remain in balance temporarily until the error is identified and rectified.
3. Rectification of errors:
- Rectification of errors involves identifying and correcting the errors made in the books of accounts.
- This process is carried out to ensure that the financial statements reflect the true and accurate financial position of the entity.
4. Implication of a balanced suspense account:
- If a suspense account balance remains even after the rectification of errors, it implies that all errors with a two-sided impact have been identified and rectified.
- However, it does not imply that all errors have been located and rectified.
- There may still be some one-sided errors present in the books that have not been identified or corrected.
5. Explanation for choosing option B:
- Option B states that there are some one side errors only in the books yet to be located.
- This option aligns with the implication of a balanced suspense account after rectification of errors.
- The existence of a balanced suspense account indicates that all two-sided errors have been rectified, but it does not guarantee the absence of one-sided errors.
- Therefore, option B is the correct answer.
In conclusion, when a suspense account balance remains even after the rectification of errors, it implies that there are some one side errors only in the books yet to be located. The existence of a balanced suspense account indicates that all two-sided errors have been rectified, but it does not guarantee the absence of one-sided errors.
Test: Rectification Of Errors - 5 - Question 15
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If an error is not detected in spite of all efforts and trial balance does not agree then what measure will be taken for the agreement of a trial balance
Detailed Solution for Test: Rectification Of Errors - 5 - Question 15

Reason for Trial Balance disagreement:
When an error is not detected and the trial balance does not agree, it indicates that there is an error in the accounting records. This could be due to a number of reasons such as:
1. Mathematical errors: Errors in adding, subtracting, multiplying, or dividing the amounts in the ledger accounts.
2. Errors of omission: When a transaction is completely omitted from the accounting records.
3. Errors of commission: When an incorrect amount is recorded in the ledger accounts.
4. Errors of principle: When a transaction is recorded in violation of accounting principles.
5. Compensating errors: When two or more errors cancel each other out, resulting in the trial balance appearing to agree.
Measures to agree Trial Balance:
In order to agree the trial balance, the following measures can be taken:
1. Verify the accuracy of the trial balance: Double-check all the account balances and ensure that they are correctly recorded.
2. Review the ledger accounts: Go through each ledger account and verify the accuracy of the transactions recorded.
3. Recheck the mathematical calculations: Verify all the calculations made in preparing the trial balance.
4. Trace the transactions: Trace each transaction from the original source documents to the ledger accounts to identify any errors or omissions.
5. Check for transposition errors: Transposition errors occur when digits are reversed, resulting in incorrect amounts. Verify all the numbers and ensure they are correctly recorded.
6. Use suspense account: If all efforts to identify the error fail, a suspense account can be opened. The difference in the trial balance is transferred to the suspense account until the error is detected and corrected.
7. Rectify errors: Once the suspense account is opened, further investigations can be conducted to identify and rectify the error. Once the error is corrected, the suspense account balance is adjusted accordingly.
Therefore, the correct measure to be taken for the agreement of a trial balance when an error is not detected is to open a suspense account (option A).
Test: Rectification Of Errors - 5 - Question 16
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If some credit sale to customer is correctly recorded in Sale book but is omitted to be recorded to Customer’s account then what type of error will it be
Detailed Solution for Test: Rectification Of Errors - 5 - Question 16

The error described in the question is when a credit sale to a customer is correctly recorded in the Sale book but is omitted to be recorded in the Customer's account. This type of error is known as an Error of Posting.
To provide a detailed solution, we can break it down into the following points:
Error of Posting:
- Error of posting occurs when a transaction is recorded in the wrong account, or when a transaction is completely omitted from an account.
- In this case, the credit sale is correctly recorded in the Sale book, but it is omitted to be recorded in the Customer's account.
Explanation:
- The Sale book is a record of all sales made on credit to customers.
- The Customer's account is a ledger account that records all transactions related to a specific customer, including credit sales.
- When a credit sale is not recorded in the Customer's account, it means that the customer's account balance will not reflect the correct amount owed by the customer.
Effects of Error of Posting:
- The omission of recording the credit sale in the Customer's account will lead to an incorrect balance in the account.
- The customer's outstanding balance will not be updated, which can result in the customer being unaware of the amount owed and potentially causing disputes or delays in payment.
Correcting the Error:
- To correct the error, the omitted entry should be posted to the Customer's account, reflecting the correct amount owed by the customer.
- The posting should be done with the appropriate date and reference to the original credit sale transaction.
In conclusion, the error described in the question is an Error of Posting. It occurs when a credit sale is correctly recorded in the Sale book but is omitted to be recorded in the Customer's account. This error can lead to incorrect customer account balances and should be corrected by posting the omitted entry to the Customer's account.
Test: Rectification Of Errors - 5 - Question 17
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Why the error of casing of subsidiary books affect the agreement of trial balance
Detailed Solution for Test: Rectification Of Errors - 5 - Question 17
Explanation:
When there is an error in the casing of subsidiary books, it can affect the agreement of the trial balance. Here's why:
1. Subsidiary books are used to record specific types of transactions: Subsidiary books such as the cash book, purchase book, sales book, etc., are used to record transactions of a specific nature. These transactions are then posted to the general ledger.
2. Errors in subsidiary books impact the accuracy of the ledger accounts: If there is an error in the casing of subsidiary books, it can lead to incorrect recording of transactions in the respective ledger accounts. For example, if a transaction is recorded in the sales book as "Sales" instead of "sales," it will create a separate account in the ledger for "Sales" instead of updating the existing "sales" account.
3. Trial balance is prepared from the ledger accounts: The trial balance is a statement that lists all the general ledger accounts and their balances. It is used to ensure that debits and credits are equal and to detect any errors in the books of accounts. The trial balance is prepared by taking the balances from the ledger accounts.
4. Errors in the ledger accounts affect the trial balance: If there are errors in the casing of subsidiary books, it will result in incorrect ledger accounts. When the trial balance is prepared using these incorrect ledger accounts, the debits and credits may not match, leading to an imbalance.
5. One side errors: Errors in the casing of subsidiary books are considered one side errors because they affect only one side of the trial balance. They do not impact the total debits or credits, but they affect the individual balances of specific accounts.
In conclusion, errors in the casing of subsidiary books can affect the agreement of the trial balance by creating imbalances in the ledger accounts. These errors are considered one side errors as they impact only one side of the trial balance.
Test: Rectification Of Errors - 5 - Question 18
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A trial balance is prepared to locate
Detailed Solution for Test: Rectification Of Errors - 5 - Question 18
A trial balance is prepared to locate:
A trial balance is a statement that lists all the general ledger account balances at a specific point in time. It is prepared to ensure that the total debits equal the total credits in the accounting system. While preparing a trial balance, the following errors can be located:
1. Error of commission:
- These errors occur when an entry is recorded with an incorrect amount or in the wrong account.
- The trial balance can help identify such errors as the balances will not match when the incorrect entry is included.
2. Error of omission:
- These errors occur when a transaction is completely omitted from the accounting records.
- The trial balance can help identify such errors as the transaction will not be included in the balances.
3. Error of principle:
- These errors occur when an entry violates an accounting principle or rule.
- The trial balance can help identify such errors as the balances may not conform to the principles or rules.
However, it is important to note that a trial balance may not be able to detect all errors, such as errors of original entry or errors that cancel each other out. Additionally, a trial balance only checks the mathematical accuracy of the accounts and does not guarantee the correctness or completeness of the transactions.
In the given options, option D "None of these" is the correct answer because a trial balance is prepared to locate errors, but it does not specifically target any particular type of error.
Test: Rectification Of Errors - 5 - Question 19
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Which of the following error would be disclosed by the Trial Balance
Detailed Solution for Test: Rectification Of Errors - 5 - Question 19
Error disclosed by the Trial Balance:
The Trial Balance is a statement that lists all the ledger accounts and their balances to ensure that the debits equal the credits. It helps in identifying errors in the books of accounts. Among the given options, the error that would be disclosed by the Trial Balance is option A.
Explanation:
Option A states that a cheque of Rs.5000 from Ram was entered in Shyam's account. This error would be disclosed by the Trial Balance because it would result in an imbalance in the accounts. The debit side of Shyam's account would be higher by Rs.5000, while the credit side would be lower by the same amount. As a result, the Trial Balance would not tally, indicating an error.
On the other hand, options B, C, and D do not involve an imbalance in the accounts and would not be disclosed by the Trial Balance. These errors may affect specific accounts or financial statements, but they would not cause a discrepancy in the total debits and credits.
Therefore, the error that would be disclosed by the Trial Balance is option A - the cheque of Rs.5000 from Ram entered in Shyam's account.
Test: Rectification Of Errors - 5 - Question 20
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Rs.4,200 paid for conveyancing has been written off instead of capitalizing. This is an error of
Detailed Solution for Test: Rectification Of Errors - 5 - Question 20

To determine the error of writing off Rs.4,200 paid for conveyancing instead of capitalizing, we need to understand the concept of capitalization and its principles.
1. Capitalization:
- Capitalization refers to the process of recording an expenditure as an asset on the balance sheet instead of immediately expensing it.
- Capitalized expenses are recorded as long-term assets and are gradually depreciated or amortized over their useful life.
2. Writing off instead of capitalizing:
- When an expense is written off instead of being capitalized, it means that the expenditure is treated as an expense in the current period and is immediately deducted from the income statement.
- This results in a decrease in net income and a decrease in the value of the asset.
3. Error of principle:
- In this scenario, the error of writing off the conveyancing expense instead of capitalizing it is an error of principle.
- The error occurs because the expense should have been capitalized as an asset since it is a cost incurred to acquire or improve a long-term asset.
- By writing it off, the company has failed to follow the accounting principle of capitalization.
Therefore, the correct answer is C. Principle as the error lies in not following the principle of capitalization.
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Rectification Of Errors - 5 MCQs with Answers

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Online Tests for Rectification Of Errors - 5 SSC CGL Tier 2 - Study Material, Online Tests, Previous Year

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