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 will result in the Trial Balance failing to balance?
Answer:
Error of partial omission
An error of partial omission occurs when a transaction is recorded in one account but omitted from the corresponding entry in another account. Because the double-entry principle is violated, the total debits will not equal the total credits, causing the Trial Balance to disagree. Other errors like principles or complete omissions do not affect the balance because the debit and credit totals remain equal.
2
Which of the following errors would result in an overstatement of gross profit?
Answer:
opening inventory omitted from the cost of sales
Gross profit is calculated as Sales - Cost of Goods Sold. Cost of Goods Sold = Opening Inventory + Purchases - Closing Inventory. If opening inventory is omitted, the cost of sales is understated, which leads to an overstatement of gross profit.
3
Into how many primary categories are accounting errors generally classified?
Answer:
Two groups
Accounting errors are broadly divided into two main groups: those that affect the trial balance (one-sided errors) and those that do not affect the trial balance (two-sided errors). This classification helps accountants determine the appropriate method for rectification, such as whether a suspense account is required to balance the books.
4
Which type of accounting error will cause a Trial Balance to become unbalanced?
Answer:
Partial omission of a transaction
A partial omission occurs when only one side of a double-entry transaction is recorded in the ledger. Because the total debits will no longer equal the total credits, the trial balance will fail to agree. Other errors, such as complete omissions or errors of principle, often affect both sides equally, leaving the trial balance totals in agreement despite the underlying error.
5
Which category of accounting error results in a disagreement within the Trial Balance?
Answer:
Mistake in balancing an account
A balancing error occurs when the arithmetic total of an account's debit or credit side is calculated incorrectly. Because the Trial Balance is a summary of all ledger account balances, any error in the calculation of an individual account balance will cause the total debits to not equal the total credits, thereby preventing the Trial Balance from agreeing.
6
Which of the following types of errors will cause a discrepancy in the trial balance?
Answer:
Partial omission of a transaction
A partial omission occurs when only one side of a double-entry transaction is recorded, leading to an imbalance in the total debits and credits. Other errors, such as complete omissions, errors of principle, and compensating errors, affect both sides equally or omit both sides entirely, thus maintaining the agreement of the trial balance.
7
Are all types of accounting errors reflected in the trial balance?
Answer:
False
Not all errors are detected by a trial balance. Errors such as errors of principle, errors of complete omission, and compensating errors do not affect the equality of the debit and credit totals, meaning the trial balance will still appear to balance despite these inaccuracies.
8
Purchases returns of $150 are wrongly posted to the debit of Sales Returns account. How does this affect the Trial Balance totals?
Answer:
The debit side exceeds the credit side by $300
Source answer preserved: option D (The debit side exceeds the credit side by $300). AI attempted to change protected answer data (option_d), so this item is flagged for manual review before study use.
9
Into how many primary groups are accounting errors typically classified?
Answer:
Two
Accounting errors are generally classified into two main groups: those that affect the trial balance (one-sided errors) and those that do not affect the trial balance (two-sided errors, such as errors of principle or complete omission).
10
Which of the following accounting errors can occur in isolation, affecting only a single account?
Answer:
All the three
Errors of casting (summation), carry forward (transferring balances), and posting (entering data into a ledger) are all types of errors that can occur within a single account. Because these errors involve the internal mechanics of a specific ledger account, they often result in a one-sided discrepancy that prevents the trial balance from balancing.