Accountancy MCQs
Topic Notes: Accountancy
General Description
Plato
- Biography: Ancient Greek philosopher (427–347 BCE), student of Socrates and teacher of Aristotle, founder of the Academy in Athens.
- Important Ideas:
- Theory of Forms
- Philosopher-King
- Ideal State
1
Which type of accounting error remains undetected by the trial balance?
Answer:
Compensatory errors
Compensating errors occur when two or more errors are committed in such a way that the net effect on the trial balance is zero. For example, if one account is debited with an extra $100 and another account is credited with an extra $100, the trial balance will still balance, masking the underlying errors in the ledger.
2
Are compensating errors characterized by their neutralizing effect on the trial balance?
Answer:
True
Compensating errors occur when two or more errors are committed in such a way that the net effect on the trial balance is zero. Because one error offsets the other, the trial balance remains balanced, making these errors particularly difficult to detect.
3
What is the term for an accounting error where the impact of one mistake is neutralized by the effect of another?
Answer:
Compensatory errors
Compensatory errors occur when two or more errors are committed in such a way that the net effect on the trial balance is zero. Because the debits and credits remain balanced despite the errors, these are often difficult to detect during the initial trial balance preparation.