Which of the following error cannot be disclosed by trial balance?Compensating errorsError of principleError of complete omissionAll of the above (2024)

FAQs

Which of the following error cannot be disclosed by trial balance?Compensating errorsError of principleError of complete omissionAll of the above? ›

Error of complete omission – If a transaction is completely omitted or not recorded in the journal or any subsidiary books, it is termed as error of omission. Such error will not effect the trial balance as it is not recorded on the debit side of an account nor on the credit side of another account.

The errors that do not affect the trial balance are as follows: Errors of omission. Errors of commission. Errors of principle.

The two most common mistakes that affect the trial balance are one-sided entries and incorrect additions. Both of these errors leave an unbalanced ending amount, so they're quickly noticeable in the trial balance.

These can include mistakes like double posting, incorrect amounts posted, wrong entries or wrong balances carried forward, which cannot be detected by the trial balance but may cause misrepresentation in individual account balances.

Errors of principle are often simply accounting entries recorded in the incorrect account. The amounts are often correct, unlike an error of original entry. Oftentimes, the error of principle is a procedural error, meaning that the value recorded is correct but the entries are made in the wrong accounts.

Errors of complete omission, error of principle, compensating error, a wrong entry in the subsidiary books are not disclosed by the trial balance. Examples of such errors are as follows: Treating revenue expenditure as capital expenditure. Omitting a transaction completely.

In such cases, trial balance will not have any difference and both the sides will show an equal amount. Below errors cannot be disclosed by trial balance: Error of principle- Revenue expenditure are debited as capital expenditure. Compensating error- One error is compensated by another error.

Errors of omission occur when there is a complete or partial omission of a transaction in the accounts. This can happen when the accountant forgets to record the transaction in either debit or credit side, which leads to partial omission and on both debit and credit side, which is complete omission.

Compensating error is when one error has been compensated by an offsetting entry that's also in error. For example, the wrong amount is recorded in inventory and is balanced out by the same wrong amount being recorded in accounts payable to pay for that inventory.

In case of Errors of Principle, there is no effect on the Trial Balance as the amounts are placed on the correct side of the Trial Balance though in wrong accounts.

Which of the following errors affects the trial balance to be unequal? ›

Answer and Explanation:

Errors of transposition will make the trial balance unequal because the recorded numbers' order can be reversed. Errors of omission will not make the trial balance unequal since they are transactions that were not recorded. Errors of principle will not affect the trial balance.

Errors that affect the agreement of a trial balance are: Posting a wrong amount to the ledger. Posting an entry on the wrong side of the ledger.

A debit (DR) is an entry made on the left side of an account. It either increases an asset or expense account or decreases equity, liability, or revenue accounts (you'll learn more about these accounts later). For example, you debit the purchase of a new computer by entering it on the left side of your asset account.

Errors of commission of posting of wrong amounts in both the accounts can be revealed by Trial Balance.

Answer and Explanation:

When an accountant enters a correct figure but in an incorrect subsidiary account of the same nature, it is known as an error of commission. When an accountant enter a correct figure but in a different account of different nature( revenue or capital), it is known as an error of principle.

There are three types of errors that are classified based on the source they arise from; They are: Gross Errors. Random Errors. Systematic Errors.

The post-closing balance includes only balance sheet accounts. You should not include income statement accounts such as the revenue and operating expense accounts. Other accounts such as tax accounts, interest and donations do not belong on a post-closing trial balance report.

C: Errors of complete omission- One transaction is completely omitted in the recording. It's a double-sided error. Hence no effect on the agreement of trial balance.

Errors can be rectified in errors of commission by either debiting or crediting the incorrect account and posting to the correct account. In errors of omission, complete omission will result in trial balance agreement, while partial omission will not result in agreement of trial balance.

Hence, trial balance is prepared for locating the clerical error.