Q: A credit sale of goods amounting to $120 to Ramesh has been wrongly passed through the Purchase Book. What is the correct rectification entry?

$$\text{Ramesh} \; 240 \; \to \text{Purchases A/c} \; 120, \; \text{Sales A/c} \; 120$$

Q: A payment of $75 for salaries has been posted twice to the Salaries Account. What is the rectification entry?

$$\text{By double posting on} \; 75$$

Q: If a cheque for $200 received from P.C. Joshi had been dishonoured and was passed to the debit of Allowances Account, what is the correct rectification entry?

$$\text{P.C. Joshi} \; 200 \; \to \text{Allowances Account} \; 200$$

Q: Which of the following is the correct rectification entry if $500 paid for furniture purchased has been charged to Purchases Account?

$$\text{Furniture A/c} \; 500 \; \to \text{Purchases A/c} \; 500$$

Q: If the total of the Returns Inward Book for December has been casted short by $100, what is the rectification entry using a Suspense Account?

$$\text{Returns Inward Account} \; 100 \; \to \text{Suspense Account} \; 100$$

Question 1

Which type of accounting error is illustrated when the purchase of a fixed asset is recorded as an expense, such as debiting Office Expenses Account instead of Machinery Account for the purchase of a computer?

Accepted Answer

Error of principle

Question 2

A credit sale of goods amounting to $120 to Ramesh has been wrongly passed through the Purchase Book. What is the correct rectification entry?

Accepted Answer

$$	ext{Ramesh} \; 240 \; 	o 	ext{Purchases A/c} \; 120, \; 	ext{Sales A/c} \; 120$$

Question 3

If the total of the Sales Book is undercast by $200, what is the effect on the trial balance?

Accepted Answer

The credit side will be $200 less than the debit side

Question 4

Which of the following errors will NOT affect the agreement of the trial balance?

Accepted Answer

Omitting an entry altogether from the subsidiary book

Question 5

A payment of $75 for salaries has been posted twice to the Salaries Account. What is the rectification entry?

Accepted Answer

$$	ext{By double posting on} \; 75$$

Question 6

Which account is used to temporarily hold the difference in the trial balance until errors are located and rectified?

Accepted Answer

Suspense Account

Question 7

Goods worth $100 taken by the proprietor for domestic use should be credited to which account?

Accepted Answer

Purchases Account

Question 8

If a cheque for $200 received from P.C. Joshi had been dishonoured and was passed to the debit of Allowances Account, what is the correct rectification entry?

Accepted Answer

$$	ext{P.C. Joshi} \; 200 \; 	o 	ext{Allowances Account} \; 200$$

Question 9

Which of the following is a compensating error?

Accepted Answer

Posting $$10 less to A’s account and 10 $$more to Sales Account

Question 10

A purchase of office furniture for $1,200 has been debited to General Expense Account. This is an example of:

Accepted Answer

An error of principle

Question 11

Which of the following is the correct rectification entry if $500 paid for furniture purchased has been charged to Purchases Account?

Accepted Answer

$$	ext{Furniture A/c} \; 500 \; 	o 	ext{Purchases A/c} \; 500$$

Question 12

If the total of the Returns Inward Book for December has been casted short by $100, what is the rectification entry using a Suspense Account?

Accepted Answer

$$	ext{Returns Inward Account} \; 100 \; 	o 	ext{Suspense Account} \; 100$$

Question 13

Which of the following errors can be rectified by a journal entry involving only the affected accounts, without using a Suspense Account?

Accepted Answer

Posting an amount in a wrong account but on the correct side

Question 14

When errors are detected in the next accounting period, which account is used to adjust prior period incomes and expenses?

Accepted Answer

Profit and Loss Adjustment Account

Question 15

A sale of $200 to Singh & Co. was wrongly credited to their account. The entry was correctly made in the sales book. What is the rectification entry?

Accepted Answer

$$	ext{Singh & Co.} \; 400 \; 	o 	ext{Suspense Account} \; 400$$

Question 16

Which of the following is a multi-step process for locating errors when the trial balance does not agree?

Accepted Answer

Re-total the trial balance columns, check for omitted balances, and compare account balances with previous periods

Rectification of Errors in Financial Accounting: Types, Detection, and Correction

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