- This topic has 1 reply, 2 voices, and was last updated 7 years ago by
.
- Posts
Dear sir, I’m finding a problem with a question on one of the ACCA practice tests. Can you please make things clear for me or is there a mistake with this question?
As far as I have learned Errors not revealed by the Trial Balance are Omission, Commission, Principle, Original Entry, Reversal of entries & Transposition
The Acca question is this:
Which of the following would be highlighted by extracting a trial balance?
(1) A transposition error was made when debiting the depreciation expense
(2) The cash book balance does not agree with the bank statement balance
(3) Sundry income has been debited to the statement of profit or loss and correctly posted to the cash account
And the answer & explanation given is:
Correct Answer
1 and 3 onlyACCA Explanation:
Errors that can be detected by extracting a trial balance are:
(1) Errors of transposition
(2) Errors of omission (if the omission is one-sided)
(3) Errors of commission (if the error is one-sided, or if two debit entries are made, for example)
1 is a transposition error and 3 is an error of commission as two debit entries have been made (Dr Statement of profit or loss, Dr Cash). Therefore they will be highlighted when the trial balance is extracted.
2 will not be highlighted by extracting the trial balance, but would be picked up when a bank reconciliation is performed.
My question is:
1. ACCA’s definition of Error of commission is wrong as that Error of commission is when the double entry was observed but in the wrong account for ex. Mr J Brown instead of Mr M Brown. Am I right?2. I agree with no. 3 being the error which is highlighted by the trial balance but I don’t agree that Transposition error is highlighted/detected by the Trial balance. Is there something I am missing here please?
Thanks
Luana1. An error of commission is when it is posted to the wrong account, and that on its own would not stop the trial balance balancing. However (as the ACCA answer says in brackets) if only one entry has been made (whether to the right or the wrong account) or if two debit entries have been made (whether to the right or wrong accounts) then it will affect the trial balance balancing.
2. Number 1 says that a transposition error was made when debited the expense. Therefore presumably the error was not made in the corresponding credit entry (otherwise the question would have said so). So the debit will not equal the credit and therefore the trial balance will not balance.
I do assume that you are watching our free lectures. If not then I do recommend that you do because our lectures are a complete course for Paper F3 and cover everything that you need to be able to pass the exam well.
🙂
- You must be logged in to reply to this topic.