NCERT Solutions for Class 11 Accountancy Chapter 6 Trial Balance and Rectification of Errors

Q.1 State the meaning of a trial balance?

Ans.

A trial balance is the list of debit and credit balances, taken out from the ledger. It also includes the balance of cash and bank taken from the cash book.

Q.2 Give two examples of errors of principle?

Ans.

The examples of errors of principle are:

• Amount spent on additions to the buildings should be treated as capital expenditure and must be debited to the asset account. Instead, if this amount is debited to maintenance and repairs account, it has been treated as a revenue expense.
• If a credit purchase of machinery is recorded in purchases book instead of journal proper or rent paid to the landlord is recorded in the cash book as payment to landlord.

Q.3 Give two examples of errors of commission?

Ans.

• Wrong posting of transactions: for example, posting of the sales book in the purchase account instead of the sales account.
• Wrong totaling or wrong balancing of the accounts: for example, purchases book is totaled as 1,000 instead of 10,000.

Q.4 What are the methods of preparing trial balance?

Ans.

The methods of preparing trial balance are

• Totals method.
• Balances method.
• Totals-cum-balances method.

Q.5 What are the steps taken by an accountant to locate the errors in the trial balance?

Ans.

The accountant should take the following steps to detect and locate the errors:

• Recast, the total of debit and credit columns of the trial balance.
• Compare the account head/title and amount appearing in the trial balance, with that of the ledger to detect any difference in amount or omission of an account.
• Compare the trial balance of current year with that of the previous year to check additions and deletions of any accounts and also verify whether there is a large difference in amount, which is neither expected nor explained.

Q.6 What is a suspense account? Is it necessary that is suspense account will balance off after rectification of the errors detected by the accountant? If not. Then what happens to the balance still remaining in suspense account?

Ans.

Suspense account is an account in which the difference in the trial balance is put till such time that errors are located and rectified.

It facilitates the preparation of financial statements even when the trial balance does not tally.

When all the errors are located and rectified the suspense account stands disposed off.

If Suspense account still shows a balance, it will be taken to the Balance Sheet (on the asset side if it shows a debit balance or on the liabilities side if it shows a credit balance.

Q.7 What kinds of errors would cause difference in the trial balance? Also list examples that would not be revealed by a trial balance?

Ans.

Errors which affect the trial balance or one sided errors are:

• When a subsidiary book is under cast (totaled less) or overcast (totaled in excess).
• When the posting to an account is altogether omitted.
• When the posting is made on the wrong side of an account.
• When the posting of a wrong amount is done.

Errors which do not affect the trial balance or two sided errors:

• Omission to pass an entry in the books original records.
• Wrong recording of a transaction in the books of original records.
• Posting to the wrong account.
• Errors of principle.

Q.8 State the limitations of trial balance?

Ans.

Limitations of Trial Balance:

• Error in totaling of the debit and credit balances in the trial balance.
• Error in totaling of subsidiary books.
• Error in showing account balances in wrong column of the trial balance or in the wrong amount.
• Omission in showing an account balance in the trial balance.
• Error in the calculation of a ledger account balance.
• Error in recording a transaction in subsidiary book with wrong name or wrong amount.

Q.9 Describe the purpose for the preparation of trial balance.

Ans.

The trial balance is prepared to fulfill the following objectives:

(a) To ascertain the arithmetical accuracy of the ledger accounts:

• The purpose of preparing a trial balance is to ascertain whether all debits and credit are properly recorded in the ledger or not and that all accounts have been correctly balanced.
• When the totals of all the debit balances and credit balances in the trial balance are equal, it is assumed that the posting and balancing of accounts is arithmetically correct.
• It ensures that all debits and the credits have been properly recorded in the ledger.

(b) To help in locating errors: When a trial balance does not tally, it is assumed that there must be error.

Errors occurred in the accounting process are:

• Totaling of subsidiary books.
• Posting of journal entries in the ledger.
• Calculating account balances.
• Carrying account balances to the trial balance and
• Totaling the trial balance columns.

(c) To help in the preparation of the financial statements. (Profit & Loss account and Balance Sheet):

• Trial balance is considered as the connecting link between accounting records and the preparation of financial statements.
• The availability of a tallied trial balance is the first step in the preparation of financial statements.
• All revenue and expense accounts appearing in the trial balance are transferred to the trading and profit and loss account and all liabilities, capital and assets accounts are transferred to the balance sheet.

Q.10 Explain errors of principle and give two examples with measure to rectify them.

Ans.

Accounting entries are recorded as per the generally accepted accounting principles, if any of these principles are violated or ignored, errors resulting from such violation are known as errors of principle.

An error of principle may occur due to incorrect classification of expenditure or receipt between capital and revenue.

Examples:

• Wages paid to a worker for making additions to machinery amounting to 5,000 were debited to the wages account.
• Purchase of office furniture worth 1,000 has been debited to the General Expenses Account.

Q.11 Explain the errors of commission and give two examples with measures to rectify them.

Ans.

Errors of Commission refers to those errors which are committed due to wrong posting of transactions, wrong totaling or wrong balancing of the accounts, wrong casting of the subsidiary books or wrong recording of amount in the books of original entry.

Examples:

• Recording purchases of goods for 6,000 as 60,000.
• Cash balance of 100 carried forward as 10,000.

Q.12 What are the different types of errors that are usually committed in recording business transaction?

Ans.

Different types of errors that are usually committed in recording business transactions are:

Errors of Commission:

These are the errors which are committed due to wrong posting of transactions, wrong totaling or wrong balancing of the accounts, wrong casting of the subsidiary books or wrong recording of amount in the books of original entry.

Example:

• Purchase book is totaled as 10,000 instead of 1,00,000.Errors of omission:

The errors of omission may be committed at the time of recording the transaction in the books of original entry or while posting to the ledger.

• Error of complete omission: When a transaction is completely omitted from recording in the books of original record, it is an error of complete omission. For example, Credit purchases from Sam of 20,000 not entered in the Purchase Book.
• Error of partial omission: When the recording of transaction is partly omitted from the books, it is an error of partial omission. For example, credit sales had been duly recorded in the sales book but the posting from sales book to Sam’s account has not been made.

Errors of principle:

Accounting entries are recorded as per the generally accepted accounting principles, if any of these principles are violated or ignored, errors resulting from such violation are known as errors of principle.

Example:

• If a credit purchase of machinery is recorded in purchases book instead of journal proper.
• Rent paid to landlord is recorded in the cash book as payment to landlord.

Compensating Errors:

When two or more errors are committed in such a way that the net effect of these errors on the debits and credits of accounts is nil, such errors are called compensating errors.

Example:

• If purchases book has been overcast by 20,000 resulting in excess debit of 20,000 in purchases account and sales returns book is under cast by 20,000 resulting in short debit to sales return account is a case of two errors compensating each other’s effect.

Q.13 As an accountant of a company, you are disappointed to learn that the totals in your new trial balance are not equal. After going through a careful analysis. You have discovered only one error. Specifically the balance of the office equipment account has a debit balance of 15,600 on the trial balance. However you have figured out that a correctly recorded credit purchase of pen drive for 3,500 was posted from the journal to the ledger with a 3,500 debit to office equipment and another 3,500 debit to creditors accounts.

Answer each of the following questions and present the amount of any misstatement:

1. Is the balance of the office equipment account overstated, understated or correctly stated in the trial balance?
2. Is the balance of the creditors account overstated, understated or correctly stated in the trial balance?
3. Is the debit column total of the trial balance overstated, understated or correctly stated?
4. Is the credit column total of the trial balance overstated, understated or correctly stated?
5. If the debit column total of the trial balance is 2,40,000 before correcting the error, what is the total of credit column.

Ans.

According to the given information, trial balance does not agree.

Pen drive is wrongly debited to office equipment instead of stationery account and supplier account is debited instead of crediting.

a) The balance of office equipment is overstated by 3,500.

b) The balance of creditors account is understated by 7,000.

c) The total of the debit column of the trial balance is correctly stated.

d) The total of the credit column of the trial balance is understated by 7,000.

e) If the total of the debit column of the trial balance is 2,40,000 before rectifying error, the total of the credit column of the trial balance is (2,40,000 – 7,000) = 2,33,000.

Q.14 Rectify the following errors:

1. Credit sales to Mohan 7,000 were not recorded.
2. Credit purchases from Rohan 9,000 were not recorded.
3. Goods returned to Rakesh 4,000 were not recorded.
4. Goods returned from Mahesh 1,000 were not recorded.

Ans.

Q.15 Rectify the following errors:

1. Credit sales to Mohan 7,000 were recorded as 700.
2. Credit purchases from Rohan 9,000 were recorded as 900.
3. Goods returned to Rakesh 4,000 were recorded as 400.
4. Goods returned from Mahesh 1,000 were recorded as 100.

Ans.

Q.16 Rectify the following errors:

1. Credit sales to Mohan 7,000 were recorded as 7,200.
2. Credit purchases from Rohan 9,000 were recorded as 9,900.
3. Goods returned to Rakesh 4,000 were recorded as 4,040.
4. Goods returned from Mahesh 1,000 were recorded as 1,600.

Ans.

Q.17 Rectify the following errors:

1. Salary paid 5,000 was debited to employee’s personal account.
2. Rent paid 4,000 was posted to landlord’s personal account.
3. Goods withdrawn by proprietor for personal use 1,000 were debited to sundry expenses account.
4. Cash received from Kohli 2,000 was posted to Kapur’s account.
5. Cash paid to Babu 1,500 was posted to Sabu’s account.

Ans.

Q.18 Rectify the following errors:

1. Credit sales to Mohan 7,000 were recorded in purchases book.
2. Credit purchases from Rohan 900 were recorded in sales book.
3. Goods returned to Rakesh 4,000 were recorded in the sales return book.
4. Goods returned from Mahesh 1,000 were recorded in purchases return book.
5. Goods returned from Mahesh 2,000 were recorded in purchases book.

Ans.

Q.19 Rectify the following errors:

1. Sales book overcast by 700.
2. Purchases book overcast by 500.
3. Sales return book overcast by 300.
4. Purchases return book overcast by 200.

Ans.

Q.20 Rectify the following errors:

1. Sales book undercast by 300.
2. Purchases book undercast by 400.
3. Returns Inward book undercast by 200.
4. Returns Outward book undercast by 100.

Ans.

Q.21 Rectify the following errors and ascertain the amount of difference in trial balance by preparing suspense account:

1. Credit sales to Mohan 7,000 were not posted.
2. Credit purchases from Rohan 9,000 were not posted.
3. Goods returned to Rakesh 4,000 were not posted.
4. Goods returned from Mahesh 1,000 were not posted.
5. Cash paid to Ganesh 3,000 was not posted.
6. Cash sales 2,000 were not posted.

Ans.

Q.22 Rectify the following errors and ascertain the amount of difference in trial balance by preparing suspense account:

1. Credit sales to Mohan 7,000 were posted as 9,000.
2. Credit purchases from Rohan 9,000 were posted as 6,000.
3. Goods returned to Rakesh 4,000 were posted as 5,000.
4. Goods returned from Mahesh 1,000 were posted as 3,000.
5. Cash sales 2,000 were posted as 200.

Ans.

Q.23 Rectify the following errors:

1. Credit sales to Mohan 7,000 were posted to Karan.
2. Credit purchases from Rohan 9,000 were posted to Gobind.
3. Goods returned to Rakesh 4,000 were posted to Naresh.
4. Goods returned from Mahesh 1,000 were posted to Manish.
5. Cash sales 2,000 were posted to commission account.

Ans.

Q.24 Rectify the following errors assuming that a suspense account was opened. Ascertain the difference in trial balance.

1. Credit sales to Mohan 7,000 were posted to the credit of his account.
2. Credit purchases from Rohan 9,000 were posted to the debit of his account as 6,000.
3. Goods returned to Rakesh 4,000 were posted to the credit of his account.
4. Goods returned from Mahesh 1,000 were posted to the debit of his account as 2,000.
5. Cash sales 2,000 were posted to the debit of sales account as 5,000.

Ans.

Q.25 Rectify the following errors assuming that a suspense account was opened. Ascertain the difference in trial balance.

1. Credit sales to Mohan 7,000 were posted to Karan as 5,000.
2. Credit purchases from Rohan 9,000 were posted to the debit of Gobind as 10,000.
3. Goods returned to Rakesh 4,000 were posted to the credit of Naresh as 3,000.
4. Goods returned from Mahesh 1,000 were posted to the debit of Manish as 2,000.
5. Cash sales 2,000 were posted to commission account as 200.

Ans.

Q.26 Rectify the following errors assuming that suspense account was opened. Ascertain the difference in trial balance.

1. Credit sales to Mohan 7,000 were recorded in Purchase Book. However, Mohan’s account was correctly debited.
2. Credit purchases from Rohan 9,000 were recorded in sales book. However, Rohan’s account was correctly credited.
3. Goods returned to Rakesh 4,000 were recorded in sales return book. However, Rakesh’s account was correctly debited.
4. Goods returned from Mahesh 1,000 were recorded through purchases return book. However, Mahesh’s account was correctly credited.
5. Goods returned to Naresh 2,000 were recorded through purchases book. However, Naresh’s account was correctly debited.

Ans.

Q.27 Rectify the following errors:

1. Furniture purchased for 10,000 wrongly debited to purchases account.
2. Machinery purchased on credit from Raman for 20,000 was recorded through purchases book.
3. Repairs on machinery 1,400 debited to machinery account.
4. Repairs on overhauling of secondhand machinery purchased 2,000 was debited to Repairs account.
5. Sale of old machinery at book value of 3,000 was credited to sales account.

Ans.

Q.28 Rectify the following errors assuming that suspension account was opened. Ascertain the difference in trial balance.

1. Furniture purchased for 10,000 wrongly debited to purchases account as 4,000.
2. Machinery purchased on credit from Raman for 20,000 recorded through purchases book as 6,000.
3. Repairs on machinery 1,400 debited to Machinery account as 2,400.
4. Repairs on overhauling of second hand machinery purchased 2,000 was debited to Repairs account as 200.
5. Sale of old machinery at book value 3,000 was credited to sales account as 5,000.

Ans.

Q.29 Rectify the following errors:

1. Depreciation provided on machinery 4,000 was not posted.
2. Bad debts written off 5,000 were not posted.
3. Discount allowed to a debtor 100 on receiving cash from him was not posted.
4. Discount allowed to a debtor 100 on receiving cash from him was not posted to discount account.
5. Bills receivable for 2,000 received from a debtor was not posted.

Ans.

Q.30 Rectify the following errors:

1. Depreciation provided on machinery 4,000 was posted as 400.
2. Bad debts written off 5,000 were posted as 6,000.
3. Discount allowed to a debtor 100 on receiving cash from him was posted as 60.
4. Goods withdrawn by proprietor for personal use 800 were posted as 300.
5. Bills receivable for 2,000 received from a debtor was posted as 3,000.

Ans.

Q.31 Rectify the following errors assuming that suspense account was opened. Ascertain the difference in trial balance.

1. Depreciation provided on machinery 4,000 was not posted to depreciation account.
2. Bad debts written-off 5,000 were not posted to debtors account.
3. Discount allowed to a debtor 100 on receiving cash from him was not posted to discount allowed account.
4. Goods withdrawn by proprietor for personal use 800 were not posted to drawings account.
5. Bills Receivable for 2,000 received from a debtor was not posted to Bills receivable account.

Ans.

Q.32 Trial balance of Anuj did not agree. It showed an excess credit of 6,000. He put the difference to suspense account. He discovered the following errors.

1. Cash received from Ravish 8,000 posted to his account as 6,000.
2. Returns inwards book overcast by 1,000.
3. Total of sales book 10,000 was not posted to sales account.
4. Credit purchases from Nanak 7,000 were recorded on sales book. However, Nanak’s account was correctly credited.
5. Machinery purchased for 10,000 was posted to purchases account as 5,000.
6. Rectify the errors and prepare suspense account.

Ans.

Q.33 Trial Balance of Raju showed an excess debit of 10,000. He put the difference to suspense account and discovered the following errors.

1. Depreciation written-off the furniture 6,000 was not posted to furniture account.
2. Credit sales to Rupam 10,000 were recorded as 7,000.
3. Purchases book undercast by 2,000.
4. Cash sales to Rana 5,000 were not posted.
5. Old Machinery sold for 7,000 was credited to sales account.
6. Discount received 800 from Kanan on playing cash to him was not posted.

Rectify the errors and prepare suspense account.

Ans.

Q.34 Trial balance of Madan did not agree and he put the difference to suspense account. He discovered the following errors.

1. Sales return book overcast by 800.
2. Purchases return to Sahu 2,000 were not posted.
3. Goods purchased on credit from Narula 4,000 though taken into stock, but no entry was passed in the books.
4. Installation charges on new machinery purchased 500 were debited to sundry expenses account as 50.
5. Rent paid for residential accommodation of madam (the proprietor) 1,400 was debited to Rent account as 1,000.

Rectify the errors and prepare suspense account to ascertain the difference in trial balance.

Ans.

Q.35 Trial balance of Kohli did not agree and showed an excess debit of 16,300. He put the difference to a suspense account and discovered the following errors.

1. Cash received from Rajat 5,000 was posted to the debit of Kamal as 6,000.
2. Salaries paid to an employee 2,000 were debited to his personal account as 1,200.
3. Goods withdrawn by proprietor for personal use 1,000 were credited to sales account as 1,600.
4. Depreciation provided on machinery 3,000 was posted to Machinery account as 300.
5. Sales of old car for 10,000 was credited to sales account as 6,000.

Rectify the errors and prepare suspense account.

Ans.

Q.36 Give journal entries to rectify the following errors assuming that suspense account had been opened.

1. Goods distributed as free sample 5,000 were not recorded in the books.
2. Goods withdrawn for personal use by the proprietor 2,000 were not recorded in the books.
3. Bills Receivable received from a debtor 6,000 was not posted to his account.
4. Total of Returns inwards book 1,200 was posted to Returns outwards account.
5. Discount allowed to Reema 700 on receiving cash from her was recorded in the books as 70.

Ans.

Q.37 Trial balance of Khatau did not agree. He put the difference to suspense account and discovered the following errors:

1. Credit sales to Manas 16,000 were recorded in the purchase book as 10,000 and posted to the debit of Manas as 1,000.
2. Furniture purchased from Noor 6,000 was recorded through purchases book as 5,000 and posted to the debit of Noor 2,000.
3. Goods returned to Rai 3,000 recorded through the sales book as 1,000.
4. Old machinery sold for 2,000 to Maneesh recorded through sales book as 1,800 and posted to the credit of Manish as 1,200.
5. Total of Returns inwards book 2,800 posted to Purchase account.

Rectify the above errors and prepare suspense account to ascertain the difference in trial balance.

Ans.

Q.38 Trial balance of John did not agree. He put the difference to suspense account and discovered the following errors:
a) In the sales book for the month of January total of page 2 was carried forward to page 3 as 1,000 instead of 1,200 and total of page 6 was carried forward to page 7 as 5,600 instead of 5,000.
b) Wages paid for installation of machinery 500 was posted to wages account as 50.
c) Machinery purchased from R & Co. for as 10,000 on credit was entered in Purchase Book as 6,000 and posted there from to R & Co. as 1,000.
d) Credit sales to Mohan 5,000 were recorded in Purchases Book.
e) Goods returned to Ram 1,000 were recorded in Sales Book.
f) Credit purchases from S & Co for 6,000 were recorded in sales book. However, S & Co. was correctly credited.
g) Credit purchases from M & Co. 6,000 were recorded in sales book as 2,000 and posted there from to the credit of M & Co. as 1,000.
h) Credit sales to Raman 4,000 posted to the credit of Raghvan as 1,000.
i) Bills receivable for 1,600 from Noor was dishonoured and posted to debit of allowances account.
j) Cash paid to Mani 5,000 against our acceptance was debited to Manu.
k) Old furniture sold for 3,000 was posted to Sales account as 1,000.
l) Depreciation provided on furniture 800 was not posted.
m) Material 10,000 and wages 3,000 were used for construction of building. No adjustment was made in the books.
Rectify the errors and prepare suspense to ascertain the difference in trial balance.

Ans.