1. Write the meaning of accounting errors.
Ans:-The errors or mistakes which are committed in the journal, ledger and any other financial statement are known as accounting errors. In other words, errors which are committed in the books of accounts are called accounting error.
2. List out the types of accounting errors.
Ans:-The accounting errors can be classified into different bases. On the basis of nature, they can be classified and listed as below:
a. Clerical errors
b. Error of omission
c. Error of commission
d. Compensating error
e. Error of duplication
f. Errors of principle
3. Write in brief one sided error.
Ans:-An error, which affects only one aspect at a transaction. Some at the examples at one sided errors are as following:
a. Wrong totaling or balancing of ledger account.
b. Omission of posting in any side of account.
c. Double posting in any side of account etc.
4. Write in brief two sided error.
Ans:-A two sided error is an error, which affect both debit aspect and credit aspect of a transaction. In other words, a two sided error is that which affects two or more accounts. Some of the examples of two sided errors are as follows:
a. Omission to pass an entry in the book of original record
b. Errors of principle etc.
5. Write the meaning of errors of principle with suitable examples.
Ans:-If a transaction is recorded in the book of accounts against the fundamental principle of double entry book-keeping, the error is known as an error of principle. For example, if an income is treated as a liability or vice-versa or if an expense is treated as an assets or vice-versa, then these errors are errors of principle. These errors will not affect the agreement of the trial balance.
6. Write the meaning of errors of omission with example.
Ans:-This error arises when a transaction is completely or partially omitted to be recorded in the books of accounts. Errors of omission may be classified as under:
a. Complete omission:-This error arises when any transaction is not recorded in the book of original entry. This error does not affect the trial balance.
Example: Goods purchased on credit from Santosh not recorded in purchases book.
b. Partial omission:-When the transaction is recorded only in one aspect and omitted to record in another aspect. It is called partial omission.
Example: Transaction correctly recorded in the book of original entry but not posted in ledger at all.
7. Write the meaning of “Error of Commission” with suitable example.
Ans:-Errors committed in the process of recording or posting, casting, carry forward and balancing either subsidiary books or ledger accounts, are called errors of commission.
The following are the examples of errors of commission:
a. Recording a wrong amount in a subsidiary book of journal. (Will not affect the agreement of trial balance.)
b. Recording of a transaction in two or more subsidiary books. (Will not affect the agreement of trial balance.)
8. State the meaning of errors of duplication with suitable example.
Ans:-There are those errors, which arise due to the double recording of a transaction in the books of original entry i.e. journal or subsidiary book. Similarly, when a transaction is posted twice into the ledger accounts, then it is also called an error of duplication. For example, if goods purchases from X are recorded two times in purchase book, the n such error is called error of duplication. Errors of duplication will not affect the trial balance.
9. Clarify the meaning of compensating error.
Ans:-Compensating error is such type of error, in which the effect of one error is compensating or neutralized by another error. To occur compensating errors, at least two errors are required. Therefore, if the effect of one error is offset by another one or more errors, it is called compensating error. For example, cash received from Manju Rs. 4500 is credited to her account by Rs. 5400 and again cash received from Sanju Rs.5400 is credited to her account by Rs.4500. Here, the first error took place being more by Rs. 900 and again second error took place being less by Rs. 900. The first error is cancelled by the second error.
10. List any four errors which can be located/disclosed by trial balance.
Ans:-The four errors which can be located /disclosed by trial balance are given below:
a. Omission of posting
b.Omission of casting
c. Wrong posting
d. Wrong totaling
11. List any four errors which cannot be located/disclosed by trial balance.
Ans:-The four errors which cannot be located /disclosed by trial balance are given below:
a. Errors of complete omission
b. Errors in recording in the book of original entry
c. Errors of principle
d. Compensating errors
12. Define suspense account.
Ans:-The trial balance prepared on the basis of ledger amount balances must be agreed on the both side i.e. debit and credit. But, if there are one sided errors occur in the recording and posting the transactions, a trial balance may not agree. In such a condition, it may be shown equal by opening an artificial amount which is known as suspense account.