Wrongly casting<\/strong><\/p>\n The debit side of the purchase account, causing the debit side to exceed the credit side by Rs. 8000, causing the trial balance to indicate a difference and not agree (see Chapter 6 of accounts for a fuller overview).<\/p>\n
Wrong Posting of Amount<\/strong><\/p>\nIf products worth Rs. 800 were purchased from BCD, but the money was mistakenly posted to BCD’s credit column as Rs. 80. As a result, the trial balance will display a discrepancy.<\/p>\n
<\/span>3. What Are the Two Errors of Commission?<\/strong><\/span><\/h3>\nFollowing are the two errors of commission:<\/p>\n
Posting of the Wrong Amount<\/strong><\/p>\nAlthough goods worth Rs. 8000 were purchased from Rahul, the amount reported to Rohit’s credit side in the purchase book was Rs. 800 rather than Rs. 8000. As a result, there will be a variation in the trial balance.<\/p>\n
Posting on the Wrong Side<\/strong><\/p>\nIf you record the things you bought from Rahul on the debit side rather than the credit side. As a result, there will be a variation in the trial balance.<\/p>\n
<\/span>4. What Are the Methods of Preparing a Trial Balance?<\/strong><\/span><\/h3>\nTotals Method<\/strong><\/p>\nSince accounting is based on double-entry methods, the sum of both debit and credit must be equal under this approach.<\/p>\n
Balances Method<\/strong><\/p>\nThe closing balances of all accounts are calculated and then brought together in this way.<\/p>\n
Totals-cum-Balances Method<\/strong><\/p>\nThe approach consists of four columns, two of which are used to write debit and credit totals, while the other two are used to write account balances.<\/p>\n
<\/span>Access NCERT Solutions For Class 11 Accountancy Chapter 6<\/span><\/h3>\n<\/span>1. State the meaning of a Trial Balance.<\/b><\/span><\/h3>\nTrial Balance is a list of all general ledgers accounts present in the ledger of a business, the main purpose of its creation is to verify the arithmetical accuracy of the accounts. It is carefully prepared after balancing of all the accounts of ledger. Trial Balance consists of two columns, debit side consists of all the debit balances and credit side contains all the credit balances of the accounts.<\/b><\/p>\n<\/span>2.Give two examples of errors of commission.<\/b><\/span><\/h3>\nErrors that are committed when transactions are recorded with wrong amounts, improper balancing, wrong posting or wrong carrying forwarding are called errors of commission. Here are two examples of such errors.<\/b><\/p>\n\n- Goods purchased worth Rs 1,000 on credit are recorded in the Purchases Book as Rs 10,000.<\/b><\/li>\n<\/ul>\n
This transaction should have been recorded in the Purchases Book with an amount of Rs 1,000; however, it was recorded as Rs 10,000. This is an error due to wrong recording of amount.<\/b><\/p>\n\n- Total of Sales Book is carried forward as Rs 1,000 instead of Rs 100.<\/b><\/li>\n<\/ul>\n
In this case, wrong amount is carried forward from one accounting period to another or from an end of one page to the beginning of another page. This is referred to as an error of carrying forward.<\/b><\/p>\n<\/span>3. Give two examples of errors of principle.<\/b><\/span><\/h3>\nErrors that are committed when recording of transactions is done against the accounting principle are known as Errors of principle. Here are some examples of the same.<\/b><\/p>\n
(i) Wages paid for construction of building debited to Wages Account<\/b><\/p>\n
In this transaction, wages paid for the construction of building is a capital expenditure, so the building account should have been debited. However, it is treated as a revenue expenditure and Wages Account is debited. It is not in accordance with the accounting principle and hence is an error.<\/b><\/p>\n
(ii) Amount spent on repair of machinery debited to Machinery Account<\/b><\/p>\n
In this transaction, amount of repair on machinery is a revenue expenditure. It should have been debited as \u2018Repairs\u2019, but it is wrongly debited to the Machinery Account which is an error of principle.<\/b><\/p>\n<\/span>4. What are the methods of preparing trial balance?<\/b><\/span><\/h3>\nBelow are diagrammatically explained methods to prepare Trial Balance.<\/b><\/p>\n
The following are the methods of preparing trial balances.<\/b><\/p>\n
Totals method: In Totals method, the total of each side (debit and credit) of the ledger account is determined individually and then it is shown in the trial balance in each of the respective columns. Accounting is based on the double entry system, therefore the total of debit column and the total of credit column in the trial balance should be in agreement with each other.<\/b><\/p>\n
Balances Method: In this method the closing balances of all accounts are tabulated in a different sheet. In this method brought down balances are brought to this statement.<\/b><\/p>\n
Totals-cum-balances Method: It utilizes both the totals method and balances method. There are four columns, of which two columns are for writing debit and credit totals of accounts while, two columns are for writing the debit and credit balances of these accounts.<\/b><\/p>\n<\/span>5. What is a suspense account? Is it necessary that 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?<\/b><\/span><\/h3>\nThere may be instances when the total of the debit column is not matching with that of the credit column. At that time the difference of the trial Balance is added to a temporary account to avoid delay in preparation of the financial statements. Such accounts are known as Suspense account. Suspense account is a temporary account in a company which contains unclassified debits and credits. If the debit column falls short of the credit column, then the Suspense Account is debited and vice versa.<\/b><\/p>\n
Errors as soon as detected and rectified, results in Suspense Account being automatically closed (i.e. becoming zero). However, if still any difference exists, then it is transferred to the Balance Sheet. If the Suspense Account shows a debit balance, then it is recorded in the Assets side and if the Suspense Account shows a credit balance, then it is recorded in the Liabilities side of the Balance Sheet.<\/b><\/p>\n<\/span>6. What are the steps taken by an accountant to locate the errors in the trial balance?<\/b><\/span><\/h3>\nAn accountant can take the following steps to locate errors in the Trial Balance:<\/b><\/p>\n\n- Determine the errors if any by re-recording debit and credit entries in the trial balance.<\/b><\/li>\n<\/ul>\n
\n- Check for any omission of account and recording that entry in trial balance.<\/b><\/li>\n<\/ul>\n
\n- Check trial balances of previous year and compare with the current year.<\/b><\/li>\n<\/ul>\n
\n- Check correctness of all ledgers<\/b><\/li>\n<\/ul>\n
\n- Half the difference, then check whether any amount is posted in the wrong column of the Trial Balance.<\/b><\/li>\n<\/ul>\n
\n- Try to divide the difference by 9, if it is completely divisible, then it\u2019s an error of transposition of figure, i.e. 123 is written as 132.<\/b><\/li>\n<\/ul>\n
\n- Entries of Subsidiary Books should be checked once again if there is difference of Rs 1, Rs 10, Rs 100, Rs 1000, etc., if difference still exists and it is not possible to detect the reason for the difference, then for the time being, that particular difference is transferred to the suspense account in order to proceed further.<\/b><\/li>\n<\/ul>\n
<\/span>7. What kinds of errors would cause difference in the trial balance? Also list examples that would not be revealed by a trial balance?<\/b><\/span><\/h3>\nThe errors that lead to the differences in the Trial Balance are termed as one-sided errors. These errors affect only one account. Here are some types of errors that can cause difference in trial balance<\/b><\/p>\n\n- If any account is wrongly casted, it is termed as the error of casting.<\/b><\/li>\n<\/ul>\n
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