FA – May 2023 – L1 – SA – Q18 – Correction of Errors

Identifying the type of errors that affect the agreement of the trial balance.

Question

Which of the following errors will affect the agreement of a trial balance?

A. Credit sales of N2,000 were recorded in the sales journal as N200

B. Purchases day book was undercast by N1,500

C. N50,000 was entered in the wrong customer’s account in the sales ledger

D. Credit purchases were recorded in the purchase day book as N42,000 instead of N24,000

E. Cash sales of N25,000 were completely omitted from the books

Answer

Explanation:
Errors that affect the agreement of the trial balance are those where the debits and credits are not equal. In this case, recording credit purchases as N42,000 instead of N24,000 results in a mismatch between the total debits and credits. This is because the purchase account will be overstated by N18,000 while the corresponding credit entry (usually accounts payable) will not match, causing a discrepancy in the trial balance.

Tags: Error Correction, Suspense account, Trial Balance
Level: Level 1

Topic: Correction of errors
Series: MAY 2023

Uploader: Theophilus