Chapter 15 Correction of Errors

Question 1

Explain the limitation of a trial balance

Answer 1

A balanced trial balance is not an absolute proof of accuracy of transactions recorded in ledger accounts because there may be errors which would not affect the balancing of the trial balance and thus would not be revealed by the trial balance.

Question 2

Explain how errors could still exist when a trial balance is balanced.

Answer 2

When a trial balance is balanced, errors can still exist when they could not be detected as they do not affect the balancing of the trial balance.

Question 3

State five examples of errors that are not revealed by a trial balance

Answer 3

-a transaction is not recorded at all
-the wrong amount is recorded in the correct side of the correct accounts
-transaction is recorded in the wrong account of a different accounting element
-transaction is recorded in the wrong account of a same accounting element
-the correct amount is recorded in the wrong sides of the correct accounts involved.