The Trial Balance

Question 1

What is trial balance

Answer 1

A list of balances on the accounts in the ledger at a certain date

Question 2

What is the purpose of preparing a trial balance

Answer 2

-to check the arithmetical accuracy of the double entry bookkeeping
-useful in preparing financial statements

Question 3

Name 4 reasons why a trial balance fails to balance

Answer 3

1- an error of addition within the trial balance
2- an error of addition within on of the ledger accounts
3- making a single entry for a transaction rather than a double entry
4- entering a transaction twice on the same side of the ledger

Question 4

Name the 6 types of errors in a trial balance

Answer 4

-error of commission
-error of complete reversal
-error of omission
-error of original entry
-error of principle
-compensating errors

Question 5

Describe the error of commission

Answer 5

When a transaction is entered using the correct amount and on the correct side,but in the wrong account of the same class

Question 6

Describe the error of complete reversal

Answer 6

When the corrected amount is entered in the correct accounts,but the entry has been made on the wrong side of each account

Question 7

Describe the error of omission

Answer 7

When a transaction has been completely omitted from the accounting records.neither a debit entry nor a credit entry has been made

Question 8

Describe the error of original entry

Answer 8

This occurs when an incorrect figure is used when a transaction is first entered in the accounting records,the double entry will therefore use the incorrect figure

Question 9

Describe error of principle

Answer 9

This occurs when a transaction is entered using the correct amount and on the correct side,but in the wrong class of account

Question 10

Describe error of compensating

Answer 10

These occur when two of more errors cancel eachother out