NCERT Class 11 Accountancy Chapter 6 Trial Balance and Rectification of Errors Solutions to each chapter is provided in the list so that you can easily browse through different chapters NCERT Class 11 Accountancy Chapter 6 Trial Balance and Rectification of Errors Notes and select need one. NCERT Class 11 Accountancy Chapter 6 Trial Balance and Rectification of Errors Question Answers Download PDF. NCERT Accountancy Class 12 Solutions.
NCERT Class 11 Accountancy Chapter 6 Trial Balance and Rectification of Errors
Also, you can read the NCERT book online in these sections Solutions by Expert Teachers as per Central Board of Secondary Education (CBSE) Book guidelines. CBSE Class 12 Accountancy Solutions are part of All Subject Solutions. Here we have given NCERT Class 11 Accountancy Chapter 6 Trial Balance and Rectification of Errors Notes, NCERT Class 11 Accountancy Chapter 6 Trial Balance and Rectification of Errors Textbook Solutions for All Chapters, You can practice these here.
Trial Balance and Rectification of Errors
Chapter: 6
| PART – I |
| Short Answers |
1. State the meaning of a trial balance?
Ans: A trial balance is a statement showing the balances, or total of debits and credits, of all the accounts in the ledger with a view to verify the arithmetical accuracy of posting into the ledger accounts. Trial balance is an important statement in the accounting process as it shows the final position of all accounts and helps in preparing the final statements. The task of preparing the statements is simplified because the accountant can take the balances of all accounts from the trial balance instead of going through the whole ledger. It may be noted that the trial balance is usually prepared with the balances of accounts.
2. Give two examples of errors of principle?
Ans: Accounting entries are recorded as per the generally accepted accounting principles. If any of these principles are violated or ignored, errors resulting from such violation are known as errors of principle.
For example:
(i) Amount spent on additions to the buildings should be treated as capital expenditure and must be debited to the asset account. Instead, if this amount is debited to maintenance and repairs account, it has been treated as a revenue expense. This is an error of principle.
(ii) Treating the purchase of an asset as an expense, this is an error of principle.
3. Give two examples of errors of commission?
Ans: The errors which are committed due to wrong posting of transactions, wrong totalling or wrong balancing of the accounts, wrong casting of the subsidiary books, or wrong recording of amount in the books of original entry, etc.
For example:
(i) Raj Hans Traders paid` 25,000 to Preetpal Traders (a supplier of goods). This transaction was correctly recorded in the cashbook. 2024-25 190 Accountancy But while posting to the ledger, Preetpal’s account was debited with` 2,500 only. This constitutes an error of commission. Such an error by definition is of clerical nature and most of the errors of commission affect in the trial balance.
(ii) Payment applied to the wrong invoice is also an example of errors of commission.
4. What are the methods of preparing trial balance?
Ans: A trial balance can be prepared in the following three ways:
(i) Totals Method.
(ii) Balances Method.
(iii) Totals-cum-balances Method.
5. What are the steps taken by an accountant to locate the errors in the trial balance?
Ans: This are the steps taken by an accountant to locate the errors in the trial balance:
(i) Recast the totals of debit and credit columns of the trial balance.
(ii) Compare the account head/title and amount appearing in the trial balance, with that of the ledger to detect any difference in amount or omission of an account.
(iii) Compare the trial balance of current year with that of the previous year to check additions and deletions of any accounts and also verify whether there is a large difference in amount, which is neither expected nor explained.
(iv) Re-do and check the correctness of balances of individual accounts in the ledger.
(v) Re-check the correctness of the posting in accounts from the books of original entry.
(vi) If the difference between the debit and credit columns is divisible by 2, there is a possibility that an amount equal to one-half of the difference may have been posted to the wrong side of another ledger account.
6. What is a suspense account? Is it necessary that is 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?
Ans: Even if the trial balance does not tally due to the existence of one sided errors, accountant has to carry forward his accounting process prepare financial statements. The accountant tallies his trial balance by putting the difference on shorter side as ‘suspense account’.
If all the errors are detected and rectified, then the Suspense Account automatically gets closed. However, if still there exists any difference, then it should be transferred to the Balance Sheet. It is not always necessary for a suspense account to balance off completely after rectifying errors.
If the Suspense Account shows a debit balance, then it is shown in the Assets side and if the Suspense Account shows a credit balance, then it is shown in the Liabilities side of the Balance Sheet.
7. What kinds of errors would cause difference in the trial balance. Also list examples that would not be revealed by a trial balance?
Ans: Some common errors include the following:
(i) Error in totalling of the debit and credit balances in the trial balance.
(ii) Error in totalling of subsidiary books.
(iii) Error in posting of the total of subsidiary books.
(iv) Error in showing account balances in wrong column of the trial balance, or in the wrong amount.
(v) Omission in showing an account balance in the trial balance.
(vi) Error in the calculation of a ledger account balance.
(vii) Error while posting a journal entry: a journal entry may not have been posted properly to the ledger, i.e., posting made either with wrong amount or on the wrong side of the account or in the wrong account.
(viii) Error in recording a transaction in the journal: making a reverse entry, i.e., account to be debited is credited and amount to be credited is debited, or an entry with wrong amount.
(ix) Error in recording a transaction in subsidiary book with wrong name or wrong amount
8. State the limitations of trial balance?
Ans: Following are the limitations of trial balance:
(i) Detection of Errors: Detecting accounting errors requires scrutiny of financial records, including the bank statement, trial balance, and general ledger entries. Regular reconciliations, reviews, and audits can help find accounting errors, discrepancies, and inconsistencies.
(ii) Balanced Accounts: Balancing of an account means that the two sides are totalled and the difference between them is shown on the side, which is shorter in order to make their totals equal. The words ‘balance carried down (c/d)’ are written against the amount of the difference between the two sides
(iii) Non-Disclosure: Failure or refusal to make something known: lack of disclosure. nondisclosure of a known problem with the property.
(iv) No Reflection of Financial Position: Tt doesn’t show the overall financial health or profitability of the business.
(v) Adjustment Exclusions: The income exclusion rule sets aside certain types of income as non-taxable. There are many types of income that qualify under this rule, such as life insurance death benefit proceeds, child support, welfare, and municipal bond income.
| Long Answers |
1. Describe the purpose for the preparation of trial balance.
Ans: Following are the purpose for the preparation of trial balance:
(i) Ascertain the balances of each account in the ledger.
(ii) List each account and place its balance in the debit or credit column, as the case may be. (If an account has a zero balance, it may be included in the trial balance with zero in the column for its normal balance).
(iii) Compute the total of debit balances column.
(iv) Compute the total of the credit balances column.
(v) Verify that the sum of the debit balances equal the sum of credit balances. If they do not tally, it indicate that there are some errors. So one must check the correctness of the balances of all accounts. It may be noted that all assets expenses and receivables account shall have debit balances whereas all liabilities, revenues and payables accounts shall have credit balances.
2. Explain errors of principle and give two examples with measures to rectify them.
Ans: Accounting entries are recorded as per the generally accepted accounting principles. If any of these principles are violated or ignored, errors resulting from such violation are known as errors of principle. An error of principle may occur due to incorrect classification of expenditure or receipt between capital and revenue. This is very important because it will have an impact on financial statements. It may lead to under/over stating of income or assets or liabilities, etc.
For example, amount spent on additions to the buildings should be treated as capital expenditure and must be debited to the asset account. Instead, if this amount is debited to maintenance and repairs account, it has been treated as a revenue expense. This is an error of principle.
(ii) Treating the purchase of an asset as an expense, this is an error of principle.
Rectification of error:
Prepare Journal Entries: Adjust entries by debiting the correct account and crediting the incorrect account.
Identify the Error: Review transactions to pinpoint violations of accounting principles.
3. Explain the errors of commission and give two examples with measures to rectify them.
Ans: These are the errors which are committed due to wrong posting of transactions, wrong totalling or wrong balancing of the accounts, wrong casting of the subsidiary books, or wrong recording of amount in the books of original entry, etc.
For example:
(i) Raj Hans Traders paid ` 25,000 to Preetpal Traders (a supplier of goods). This transaction was correctly recorded in the cashbook. But while posting to the ledger, Preetpal’s account was debited with ` 2,500 only. This constitutes an error of commission. Such an error by definition is of clerical nature and most of the errors of commission affect in the trial balance.
(ii) Payment applied to the wrong invoice is also an example of errors of commission.
Rectification of error:
Update Financial Statements: Adjust statements to reflect accurate figures.
Identify the Error: Review records to pinpoint where incorrect amounts were entered.
4. What are the different types of errors that are usually committed in recording business transaction.
Ans: There are four kind of errors the errors can be classified into the following four categories:
(i) Errors of Commission: These are the errors which are committed due to wrong posting of transactions, wrong totalling or wrong balancing of the accounts, wrong casting of the subsidiary books, or wrong recording of amount in the books of original entry, etc.
For example: Raj Hans Traders paid ` 25,000 to Preetpal Traders (a supplier of goods). This transaction was correctly recorded in the cashbook. But while posting to the ledger, Preetpal’s account was debited with ` 2,500 only.
(ii) Errors of Omission: The errors of omission may be committed at the time of recording the transaction in the books of original entry or while posting to the ledger.
These can be of two types:
(i) error of complete omission.
(ii) error of partial omission.
When a transaction is completely omitted from recording in the books of original record, it is an error of complete omission.
Example: Credit sales had been duly recorded in the sales book but the posting from sales book to Mohan’s account has not been made.
(iii) Errors of Principle: Accounting entries are recorded as per the generally accepted accounting principles. If any of these principles are violated or ignored, errors resulting from such violation are known as errors of principle.
Example: Amount spent on additions to the buildings should be treated as capital expenditure and must be debited to the asset account. Instead, if this amount is debited to maintenance and repairs account, it has been treated as a revenue expense.
(iv) Compensating Errors: When two or more errors are committed in such a way that the net effect of these errors on the debits and credits of accounts is nil, such errors are called compensating errors. Such errors do not affect the tallying of the trial balance.
Example: If purchases book has been overcast by ` 10,000 resulting in excess debit of ` 10,000 in purchases account and sales returns book is undercast by ` 10,000 resulting in short debit to sales returns account.
