ERROR DISCLOSED BY TRIAL BALANCE

ERROR DISCLOSED BY TRIAL BALANCE

It the two sides of a trial balance are not equal, it is the proof of the existence of error. There may, of course, be more than one error.

The main reasons of such errors are given below;

1.) An item omitted to be posted from a subsidiary book into the ledger i.e., A purchase of Rs.1000 from Navin omitted to be credited to his account. As a result of this error, the figure of sundry creditors to be shown in the Trial Balance will reduce by Rs.1000 and the total of the credit side of the Trial Balance will b Rs.1000 less as compared to the debit side of the Trial Balance.

2.) Posting of wrong amount to a ledger account i.e., A Credit sale of Rs. 2000 to Aarti wrongly posted to her account as Rs.200. the effect of this error will be that the figure of sundry debtors will be reduced by Rs.1800 and the total of the debit side of the Trial Balance will be Rs.1800 Less than the total of the credit side of the Trial Balance.

3.) Posting an amount to the wrong side of the ledger account i.e., Rs.50 Discount allowed to a Customer wrongly posted to the credit instead of the debit side of the discount account. As a result to this error, the credit side of the Trial Balance will exceed by Rs.100 (double the amount of the error).

4.) Wrong additions or balancing of ledger accounts i.e., while Balancing Capital account at the end of the financial year, credit balance of Rs.89000 wrongly taken as Rs.79000. as a result of this error, the credit total of the Trial Balance will Rs.10000 too short.


5.) Wrong totaling of subsidiary books i.e., Sales Book is overcast by Rs.10 as result of this error, credit side of the Trial balance will be Rs.10 too much because sales account will appear at a higher figure on the credit side of the Trial Balance.

6.) An item in the subsidiary book posted twice to a ledger account i.e., Payment of Rs.1000 to a creditor posted twice to his account.

7.) Omission of Balance of an account in the Trial Balance Cash and Bank Balance may have been omitted to be included in the Trial Balance.

8.) Balance of Some account wrongly entered in the Trial Balance i.e., A Balance of Rs. 513 in Stationery Account wrong entered as Rs.315in the Trial balance.

9.) Balance of some account written to the wrong side of the Trial Balance i.e., Balance of Commission earned account wrongly shown to the side instead of the credit side of the Trial Balance.

10.) An error in the Totaling of the Trial Balance will bring the disagreement of the Trial Balance.


ERROR NOT DISCLOSED BY A TRIAL BALANCE

It is certain that the error exists of the debits of trial balance are not equal to its credits. But the fact that trial balance is in balance does not prove the accuracy of accounts. There is a possibility of mistakes which will not upset the equilibrium of the equality of debits and credits and thus is a proof only of arithmetic accuracy of posting.

The following are the cases of such error which are not disclosed by a trail balance:

1.) Omission of an entry in a subsidiary book:- if an entry has not been recorded in a subsidiary book both the debit and credit of that transaction would be omitted and the agreement of the trial balance will not be affected in any way.

2.) A wrong entry in a subsidiary book: - If a Credit purchase of Rs.465 from Annu is Wrongly written as Rs.564 in the Purchase book, such an error will not be disclosed by the trial balance. As the posting on both the debit side of purchases account and credit side annu’s account will be with the wrong amount of Rs.564, so the trial balance will agree.
3.) Posting an item to the correct side but in the wrong account:- If a purchase of Rs.500 from Vasant Desai has been credited to Himanshu Desai in stead of Vasant Desai, it will not affect the agreement of the Trial Balance, so the Trial Balance will not detect such an error.

4.) Compensating error:- These are errors which compensate themselves in the net result, i.e., over-debits or under-debits of various accounts being neutralized by the over-credits or under-credits to the same extent of some other accounts. For example under-posting of Rs.500 on the debit side of a certain account would be compensated by under-posting of Rs.100 on the credit side of another account and an omission of credit posting of Rs.400 to a third account. It is quite possible that this error may also be neutralized by over-posting of Rs.500 on the debit side in some other account or accounts or accounts.

5.) Errors of Principle:- These errors will not affect the agreement of the trial balance as they arise from the debiting or crediting of wrong heads of accounts as would be


inconsistent with the fundamental principles of double entry accounting. For Example Rs.6550 spent in extension of building wrongly debited to repairs account instead of building account will not affect the agreement of the Trial balance. Thus, such errors arise whenever an asset is treated as an expense or vise versa or a liability is treated as an income or vise versa.

No comments:

PDF FILE TO YOUR EMAIL IMMEDIATELY PURCHASE NOTES & PAPER SOLUTION. @ Rs. 50/- each (GST extra)

HINDI ENTIRE PAPER SOLUTION

MARATHI PAPER SOLUTION

SSC MATHS I PAPER SOLUTION

SSC MATHS II PAPER SOLUTION

SSC SCIENCE I PAPER SOLUTION

SSC SCIENCE II PAPER SOLUTION

SSC ENGLISH PAPER SOLUTION

SSC & HSC ENGLISH WRITING SKILL

HSC ACCOUNTS NOTES

HSC OCM NOTES

HSC ECONOMICS NOTES

HSC SECRETARIAL PRACTICE NOTES

2019 Board Paper Solution

HSC ENGLISH SET A 2019 21st February, 2019

HSC ENGLISH SET B 2019 21st February, 2019

HSC ENGLISH SET C 2019 21st February, 2019

HSC ENGLISH SET D 2019 21st February, 2019

SECRETARIAL PRACTICE (S.P) 2019 25th February, 2019

HSC XII PHYSICS 2019 25th February, 2019

CHEMISTRY XII HSC SOLUTION 27th, February, 2019

OCM PAPER SOLUTION 2019 27th, February, 2019

HSC MATHS PAPER SOLUTION COMMERCE, 2nd March, 2019

HSC MATHS PAPER SOLUTION SCIENCE 2nd, March, 2019

SSC ENGLISH STD 10 5TH MARCH, 2019.

HSC XII ACCOUNTS 2019 6th March, 2019

HSC XII BIOLOGY 2019 6TH March, 2019

HSC XII ECONOMICS 9Th March 2019

SSC Maths I March 2019 Solution 10th Standard11th, March, 2019

SSC MATHS II MARCH 2019 SOLUTION 10TH STD.13th March, 2019

SSC SCIENCE I MARCH 2019 SOLUTION 10TH STD. 15th March, 2019.

SSC SCIENCE II MARCH 2019 SOLUTION 10TH STD. 18th March, 2019.

SSC SOCIAL SCIENCE I MARCH 2019 SOLUTION20th March, 2019

SSC SOCIAL SCIENCE II MARCH 2019 SOLUTION, 22nd March, 2019

XII CBSE - BOARD - MARCH - 2019 ENGLISH - QP + SOLUTIONS, 2nd March, 2019


BUY FROM PLAY STORE

DOWNLOAD OUR APP


HOW TO PURCHASE OUR NOTES?



S.P. Important Questions For Board Exam 2020


O.C.M. Important Questions for Board Exam. 2020


Economics Important Questions for Board Exam 2020


Chemistry Important Question Bank for board exam 2020


Physics – Section I- Important Question Bank for Maharashtra Board HSC Examination


Physics – Section II – Science- Important Question Bank for Maharashtra Board HSC 2020 Examination


MUST REMEMBER THINGS on the day of Exam


Are you prepared? for English Grammar in Board Exam.


Paper Presentation In Board Exam


How to Score Good Marks in SSC Board Exams


Tips To Score More Than 90% Marks In 12th Board Exam


How to write English exams?


How to prepare for board exam when less time is left


How to memorise what you learn for board exam


No. 1 Simple Hack, you can try out, in preparing for Board Exam

How to Study for CBSE Class 10 Board Exams Subject Wise Tips?

JEE Main 2020 Registration Process – Exam Pattern & Important Dates

NEET UG 2020 Registration Process Exam Pattern & Important Dates

How can One Prepare for two Competitive Exams at the same time?

8 Proven Tips to Handle Anxiety before Exams!