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Question
Errors which compensate the effect of each other are called __________ errors.
Errors which compensate the effect of each other are called __________ errors.
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Solution
The correct option is A compensating
Accounting errors are classified as:1) Error of Principle2) Error of omission3) Error of commission4) Compensating error
Compensating error of those where one error compensate the other error. In this situation, trial balance does not have any difference. For example, Sales of Rs.450 is recorded in the ledger of Ram as Rs.4500, on the other side, Purchases of Rs.450 is recorded in Shyam's account as Rs.4500.In such situation, a net effect of Rs.4050 is effected both the sides.
Accounting errors are classified as:
1) Error of Principle
2) Error of omission
3) Error of commission
4) Compensating error
Compensating error of those where one error compensate the other error. In this situation, trial balance does not have any difference. For example, Sales of Rs.450 is recorded in the ledger of Ram as Rs.4500, on the other side, Purchases of Rs.450 is recorded in Shyam's account as Rs.4500.
In such situation, a net effect of Rs.4050 is effected both the sides.
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