Correction of Errors (Y7C14)

1	The debit side of a trial balance totals $800 more than the credit side. Which one of the following errors would fully account for the difference?
	A	$400 paid for plant maintenance has been correctly entered in the cash book and credited to the plant asset account.
	B	Discount received $400 has been debited to discount allowed account.
	C	A receipt of $800 for commission receivable has been omitted from the records.
	D	The petty cash balance of $800 has been omitted from the trial balance.
2	The bookkeeper of Peri made the following mistakes: Discount allowed $3,840 was credited to discounts received account. Discount received $2,960 was debited to discounts allowed account. Discounts were otherwise correctly recorded. Which one of the following journal entries will correct the errors?
						Dr $				Cr $
	A	Discount allowed Discount received Suspense account				7,680				5,920 1,760
	B	Discount allowed Discount received Suspense account				880 880				1,760
	C	Discount allowed Discount received				6,800				6,800
	D	Suspense account Discount allowed Discount received				1,760				880 880
3	A company's trial balance failed to agree, the totals being:
	Debit Credit			$815,602 $808,420
	Which one of the following errors could fully account for the difference?
	A	The omission from the trial balance of the balance on the insurance expense account $7,182 debit
	B	Discount allowed $3,591 debited in error to the discount received account
	C	No entries made in the records for cash sales totalling $7,182
	D	The returns outwards total of $3,591 was included in the trial balance as a debit balance
4	The debit side of a trial balance totals $50 more than the credit side. Which one of the following could this be due to?
	A	A purchase of goods for $50 being omitted from the payables control account
	B	A sale of goods for $50 being omitted from the receivables control account
	C	An invoice of $25 for electricity being credited to the electricity account
	D	A receipt for $50 from a customer being omitted from the cash book
5	Which one of the following would be an error of principle?
	A	Plant and machinery purchased was credited to a non-current assets account.
	B	Plant and machinery purchased was debited to the purchases account.
	C	Plant and machinery purchased was debited to the equipment account.
	D	Plant and machinery purchased was credited to the equipment account.
6	What is an error of commission?
	A	An error where a transaction has not been recorded
	B	An error where one side of a transaction has been recorded in the wrong account, and that account is of a different class to the correct account
	C	An error where one side of a transaction has been recorded in the wrong account, and that account is of the same class as the correct account
	D	An error where the numbers in the posting have been transposed
7	Where a transaction is entered into the correct ledger accounts, but the wrong amount is used, what is the error known as?
	A	An error of omission
	B	An error of original entry
	C	An error of commission
	D	An error of principle
8	A business statement of profit or loss and other comprehensive income for the year ended 31 December 20X4 showed a net profit of $83,600. It was later found that $18,000 paid for the purchase of a motor van had been debited to motor expenses account. It is the company's policy to depreciate motor vans at 25 per cent per year, with a full year's charge in the year of acquisition. What would the net profit be after adjusting for this error?
	A	$106,100
	B	$70,100
	C	$97,100
	D	$101,600
9	An organisation restores its petty cash balance to $250 at the end of each month. During October, the total expenditure column in the petty cash book was calculated as being $210, and the imprest was restored by this amount. The analysis columns posted to the nominal ledger totalled only $200. Which one of the following would this error cause?
	A	The trial balance being $10 higher on the debit side
	B	The trial balance being $10 higher on the credit side
	C	No imbalance in the trial balance
	D	The petty cash balance being $10 lower than it should be
10	Net profit was calculated as being $10,200. It was later discovered that capital expenditure of $3,000 had been treated as revenue expenditure, and revenue receipts of $1,400 had been treated as capital receipts. What is the net profit after correcting this error?
	A	$5,800
	B	$8,600
	C	$11,800
	D	$14,600
11	The accountant at Investotech discovered the following errors after calculating the company's profit for 20X3:
	(a)	A non-current asset costing $50,000 has been included in the purchases account
	(b)	Stationery costing $10,000 has been included as closing inventory of raw materials, instead of stationery expenses
	What is the effect of these errors on gross profit and net profit?
	A	Understatement of gross profit by $40,000 and understatement of net profit by $30,000
	B	Understatement of both gross profit and net profit by $40,000
	C	Understatement of gross profit by $60,000 and understatement of net profit by $50,000
	D	Overstatement of both gross profit and net profit by $60,000
12	A purchase return of $48 has been wrongly posted to the debit of the sales returns account, but has been correctly entered in the supplier's account. Which of the following statements about the trial balance would be correct?
	A	The credit side to be $48 more than the debit side
	B	The debit side to be $48 more than the credit side
	C	The credit side to be $96 more than the debit side
	D	The debit side to be $96 more than the credit side
13	Two types of common errors in bookkeeping are errors of principle and errors of transposition. Which of the following correctly states whether or not these errors will be revealed by extracting a trial balance?
		Errors of principle					Errors of transportation
	A	Will be revealed					Will not be revealed
	B	Will be revealed					Will be revealed
	C	Will not be revealed					Will not be revealed
	D	Will not be revealed					Will be revealed
14	The following are balances on the accounts of Luigi, a sole trader, as at the end of the current financial year and after all entries have been processed and the profit for the year have been calculated.
	Non-current assets Receivables Trade payables Bank loan Allowance for depreciation, non-current assets Inventory Accruals Prepayments Bank overdraft							$ 85,000 7,000 3,000 15,000 15,000 4,000 1,000 2,000 2,000
	What is the balance on Luigi’s capital account?
	A	$59,000
	B	$66,000
	C	$62,000
	D	$64,000
15	The following balances have been extracted from the nominal ledger accounts of Tanya, but the figure for bank loan is unknown. There are no other accounts in the main ledger.
	Payables Capital Purchases Sales Other expenses Receivables Purchase returns Non-current assets Cash in bank Bank loan			$ 27,000 66,000 160,000 300,000 110,000 33,000 2,000 120,000 18,000 Unknown
	What is the credit balance on the bank loan account?
	A	$46,000
	B	$102,000
	C	$78,000
	D	$34,000
16	Beta Co has total assets of $650,000 and profit for the year of $150,000 recorded in the financial statements for the year ended 31 December 20X3. Inventory costing $50,000, with a resale value of $75,000, was received into the warehouse on 2 January 20X4 and included in the inventory value that was recorded in the financial statements at 31 December 20X3. What would the total assets figure in the Statement of Financial Position, and the adjusted profit for the year figure, be after adjusting for this error?
		Total assets (SOFP)					Profit for the year
	A	$700,000					$200,000
	B	$600,000					$100,000
	C	$725,000					$225,000
	D	$600,000					$75,000
17	The electricity account for Jingles Co for the year ended 30 June 20X1 was as follows.
	Opening balance for electricity accrued at 1 July 20X0 Payments made during the year 1 August 20X0 for three months to 31 July 20X0 1 November 20X0 for three months to 31 October 20X0 1 February 20X1 for three months to 31 January 20X1 30 June 20X1 for three months to 30 April 20X1										$ 300 600 720 900 840
	Jingles Co expects the next bill due in September to be for the same amount as the bill received in June. What are the appropriate amounts for electricity to be included in the financial statements of Jingles Co for the year ended 30 June 20X1?
		SOFP					SPL
	A	$560					$3,320
	B	$560					$3,060
	C	$860					$3,320
	D	$860					$3,060