Chapter 6: Errors and corrections to accounting records and financial statements

Question 1

True or false: Che owner’s drawings are shown on the initial trial balance

Answer 1

True

Question 2

True or false: Closing inventory balance is included in the final trial balance

Answer 2

True

Question 3

True or false: In preparing a bank reconciliation, unpresented cheques must be deducted from the balance shown in the bank statement

Answer 3

True

Question 4

True or false: A cheque from a customer paid into the bank but dishonoured must be corrected by making a debit entry in the cash at bank account

Answer 4

False

Question 5

True or false: An error by the bank must be corrected by an entry in the cash at bank account

Answer 5

False

Question 6

True or false: An overdraft is a debit balance in the bank statement

Answer 6

True

Question 7

True or false: Bank charges that only appear on the bank statement must be debited to the cash at bank account

Answer 7

False

Question 8

True or false: All differences between the cash at bank account and the bank statement must be corrected by means of a journal entry

Answer 8

False

Question 9

True or false: In preparing a bank reconciliation, cheques received from credit customers before the period end but credited by the bank after the period end should reduce an overdrawn balance in the bank statement

Answer 9

True

Question 10

True or false: Bank charges not yet entered in the cash at bank account should be dealt with by an adjustment to the balance per the bank statement

Answer 10

False

Question 11

True or false: If a cheque received from a credit customer is dishonoured after datem a credit entry in the cash at bank account is required.

Answer 11

True

Question 12

What is an error of commission?

Answer 12

One side of a transaction has been recorded in the wrong account, and that account is of the same class as the wrong account