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1. Which type of error normally occur in manual accounts but do not occur in Computerised Accounts
(a) Errors of Omission.
(b) Errors of Commission.
(c) Errors of Principle.
(d) None of the above
Error arising due to casting, recording, posting, carried forward on wrong balancing etc. Such human errors normally occur in manual accounts but do not occur in Computerised Accounts.So,Hence option (b) is correct.
2. Sales to Smita Rs.175 posted to his account as Rs.157, It is an example of
(a) Errors of Omission.
(b) Errors of Commission.
(c) Errors of Principle.
(d) None of the above.
Error arising due to casting, recording, posting, carried forward on wrong balancing is called error of commission. So, this is an example of error of commission. Hence option (b) is correct
3. Repairs to Machinery had been charged to Machinery A/c.
(a) Errors of Omission.
(b) Errors of Commission.
(c) Errors of Principle.
(d) None.
Error of principle means the transactions recorded ignoring the difference in the capital and revenue items. Repairs to machinery is revenue expenditure but it has wrongly charged to machinery account i.e. Capital Expenditure. So, this is an error of principle. Hence option (c) is correct.
4. A Goods of the value of Rs.500 out of earlier credit purchase was returned by Raja and was taken into stock but no entry was made in the books.
(a) Errors of Omission.
(b) Errors of Commission.
(c) Errors of Principle.
(d) None of the above.
Errors of omission means when a transaction is partially or completely omitted. .So, this is not an error of omission. In this case, an entry for credit of Rs 500 for returns inward is omitted. So, this is an error of omission. Hence option (a) is correct
5. Goods taken away by the proprietor for personal use not recorded
(a) Errors of Omission.
(b) Errors of Commission.
(c) Errors of Principle.
(d) None.
Errors of omission means when a transaction is partially or completely omitted. .So, this is not an error of omission. In this case, an entry for goods taken for personal use s omitted. So, this is an error of omission. Hence option (a) is correct
6. Sales Book was overcast by Rs.1, 000
(a) Errors of Omission.
(b) Errors of Commission.
(c) Errors of Principle.
(d) None of the above.
Error arising due to casting, recording, posting, carried forward on wrong balancing is called error of commission. So, this is an example of error of commission. So, option (b) is correct.
7. What is an Example of Errors of Omission?
(a) When the transaction recorded is in contravention with the general accounting policies.
(b) When the account is written on the wrong side or posted in wrong account or casting errors etc.
(c) When a transaction is partially or completely omitted.
(d) When the effect of errors committed cancel out each other.
When a transaction is partially or completely omitted is called errors of omission. Hence option (c) is correct
8. What is an Error of Commission?
(a) When the effect of errors committed cancel out each other.
(b) When the transaction recorded is in contravention with the general accounting policies.
(c) When the amount is written on the wrong side or posted in wrong account or casting errors etc.
(d) When a transaction is partially or completely omitted.
Clerical errors like casting, recording, posting, carried forward on wrong balancing, etc are called error of commission. So, this is an example of error of commission. Hence option (c) is correct
9. What is an Error of Principle?
(a) When the transaction is recorded in contravention accounting principles.
(b) When two or more errors are compensated by the effect of other errors (compensating errors)
(c) When the transaction is partially or completely omitted.
(d) None of the above.
When the transaction recorded is in contravention with the general accounting policies is called error of principle. Hence option (a) is correct.
10. Wages paid for installation of Machine is included in Wages Account. It is
(a) Error of commission
(b) Errors of Omission
(c) There is no error
(d) Error of Principle
Error of principle means the transactions recorded ignoring the difference in the capital and revenue items. Installation cost of machinery is capital expenditure (which increases the cost of machinery) but it has wrongly charged to wages account (i.e. revenue expenditure) So, this is an error of principle. Hence option (d) is correct.
11. Errors which affect one account can be due to
(a) Errors of omission
(b) Errors of principle
(c) Errors of posting
(d) None of the above
Errors of posting may affect only one account. Hence option (c) is correct.
12. The error in the casting of sales book is called as ———-
(a) Error of Principle.
(b) Clerical Error.
(c) Error of Omission.
(d) Error of Commission.
Error arising due to casting, recording, posting, carried forward on wrong balancing is called error of commission. So, this is an example of error of commission. Hence option (d) is correct.
13. Goods purchased from A for Rs.5, 000 were passed through sales book. The rectification of the error will
(a) Increase the gross profit
(b) Decrease the gross profit
(c) Have no effect on the gross profit
(d) Increase the net profit
Goods purchased posted in sales have increased profit. The rectification entry would consequently decrease profit due to decrease in sales and increase in purchase. Hence option (b) is correct.
14. Wages paid Rs.1, 050 in cash, for installation of machinery are debited to Wages A/c. The rectification entry is.
(a)Machinery A/c Dr. 1,050
To Cash A/c 1,050
(b)Machinery A/c Dr. 1,050
To Wages A/c 1,050
(c)Wages A/c Dr. 1,050
To Cash A/c 1,050
(d) None of the above
The amount of 1050 was wrongly debited to wages a/c instead of machinery a/c. Hence option (b) is correct
15. A purchase of Rs.1, 000 from Sham entered in the Day Book as Rs.100. What will be the rectifying entry?
(a) Purchase A/c Dr. 100
To Sham A/c 100
(b) Sham A/c Dr. 900
To Purchase A/c 900
(c) Purchase A/c Dr. 900
To Sham A/c 900
(d) Purchase A/c Dr. 1,000
To Sham A/c 1,000
The purchase A/c is already debited with Rs.100. So, it is under cast by Rs.900. So, again a rectification entry will be passed debiting purchase a/c and crediting Sham a/c with Rs.900 (the difference of Rs 1000 & Rs 100). So, option (c) is correct.
16. The purchase of furniture of Rs.2, 000 has been posted to purchase Account. What will be the rectification entry?
(a)Furniture A/c Dr. 2,000
To Cash A/c 2,000
(b)Furniture A/c Dr. 2,000
To Suspense A/c 2,000
(c)Furniture A/c Dr. 2,000
To Purchase A/c 2,000
(d)Furniture A/c Dr. 2,000
To Bank A/c 2,000
Instead of Furniture A/c, purchase A/c has been debited with Rs.2,000. So, to rectify it, furniture A/c will be debited and purchase account will be credited to reduce the wrong amount. So, option (c) is correct.
17. Rs.500 received from Smita in cash, in respect of bad debt written off in a previous year, now recovered, and credited to Smita A/c. What will be the rectification entry?
(a) Smita A/c Dr. 500
To Bad Debts Recovery A/c 500
(b) Sales A/c Dr. 500
To Cash A/c 500
(c) Bad Debts A/c Dr. 500
To Bad Debt Recovery A/c 500
(d) None of the above
The Bad Debt Recovery A/c should have been credited Bad Debts Recovery Account (which is an Income Account), and not to Smita’s Account. As the Smita A/c has been wrongly credited, it will be debited by Rs.500. and Bad Debt Recovery A/c will be credited. So option (a) is correct.
18. A cheque of Rs.1, 000 received from Ram was dishonored. The cheque return entry is posted to the debit of sales return account. Rectifying journal entry will be:
(a) Sales return A/c Dr. 1000
To Ram A/c 1,000
(b) Ram A/c Dr. 1000
To Sales Return A/c 1,000
(c) Sales return A/c Dr. 1,000
To Suspense A/c 1,000
(d) None of the above.
Sales return account has been wrongly debited instead of Ram’s a/c. So, Ram’s a/c will be debited and sales return a/c would be credited to rectify the mistake. So option (b) is correct.
19. A bad debt (written off earlier) has been recovered from Mr. N and credited to N’s personal account. The rectification entry will
(a) Decrease the gross profit
(b) Increase the net profit
(c) No effect in gross profit
(d) No effect in net profit
Due to wrong credit to personal a/c, profit was decreased (as a personal a/c was credited instead of nominal a/c).The rectification entry will increase the profit. So option (b) is correct.
20. An old furniture was sold for Rs.500 in cash and entered in cash book, crediting sales Account as Rs. 600. What will be the rectification entry?
(a) Sales A/c Dr. 500
To Furniture A/c 500
(b) Sales A/c Dr. 600
To Cash A/c 600
(c) Sales A/c Dr. 600
To Furniture A/c 500
To Cash A/c 100
(d) None of the above
The sales A/c has been wrongly credited by Rs.600. To rectify the account, sales will be debited by Rs.600. The furniture A/c should be credited by Rs.500 as it has been sold out and no entry was passed earlier for sale of the furniture.
Cash A/c is also overcast by Rs.100. So cash will be credited by Rs.100 to reduce the excess amount. So, option (c) is correct.
21. Goods of Rs.1,000 purchased from Mr. “A” were recorded in sales book, the rectification of this error will:
A) Increase the gross profit
B) Reduce the gross profit
C) Have no effect on gross Profit
D) None of the given options
As Goods sold, which causes increase in Gross Profit, was wrongly included in Purchase Book, increasing Purchase and reducing Gross Profit. So, on rectification, of the mistake, the Gross Profit will reduce. Hence, option B is correct
22. Which of the following account will be credited when a typewriter is sold that has been used in the office?
A) Purchase Account
B) Sales Account
C) Cash Account
D) Office Equipment Account
On sale of Typewriter, Office Equipment Account would be credited. Hence, option D is correct
23. When one or both aspects of a transaction are recorded in the wrong class or category of account, this is called:
A) Error of principle
B) Error of omission
C) Error of commission
D) Error of original entry
When one or both aspects of a transaction are recorded in the wrong class or category of account, this is called Error of Principle. Hence, option A is correct
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