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The debit side of a trial balance totals $800 more than the credit side.
Which one of the following errors would fully account for the difference?
A. $400 paid for plant maintenance has been correctly entered in the cash book and credited to the plant asset account.
B. Discount received $400 has been debited to discount allowed account
C. A receipt of $800 for commission receivable has been omitted from the records
D. The petty cash balance of $800 has been omitted from the trial balances
What is the first approach to such questions sir?
The only approach it to look at each of the possible answers separately and decide whether the error makes the debits bigger by 800 or not. If you need then make up little t-accounts to help you.
For example, answer D: petty cash is a debit balance because it is an asset. If it is omitted then the debits will be too small (rather than too big) – so it is not D 🙂
No – you are not asked to correct the mistakes. You just need to think through each of them in the way I wrote about D, and decide which one of them will make the debits 800 more than the credits.
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