- 6 Marks
Question
The purpose of a trial balance is to prove the accuracy of the General Ledger accounts of a business. However, the “balancing” of the debit side and the credit side of a trial balance does not guarantee that there is no error in the General Ledger accounts.
i. State TWO uses of a trial balance to an entity. (2 Marks)
ii. State FOUR errors that may lead to difference in trial balance total figures. (2 Marks)
iii. State FOUR errors that may NOT affect the “balancing” of a trial balance. (2 Marks)
Answer
(i) Two uses of a trial balance to an entity:
- Proving the arithmetical accuracy of all the ledger postings.
- Showing ledger balances at a glance.
(ii) Four errors that may lead to a difference in trial balance total figures:
- Casting error.
- Transposition error.
- Wrong amount being transferred from ledger to the trial balance.
- Omission of ledger balances in the trial balance.
(iii) Four errors that may NOT affect the “balancing” of a trial balance:
- Error of omission.
- Error of original entry.
- Error of principle.
- Compensating error.
- Topic: Trial Balance: Usefulness and Limitations
- Series: MAY 2015
- Uploader: Joseph
