What are the steps taken by an accountant to locate the errors in the trial balance?

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Solution

Here are the steps taken by an accountant to locate the errors in the trial balance

(i) Recheck the totals of debit and credit columns of the trial balance.

(ii) Compare the account head/title and amount appearing in the trial balance, with that of the ledger to detect any difference in amount or omission of an account.

(iii) Compare the trial balance of the current year with that of the previous year to check additions and deletions.

(iv) Check the correctness of balances of individual accounts in the ledger.

(v) Re-check the correctness of the posting in accounts from the books of original entry.

(vi) If the difference between the debit and credit columns is divisible by 2, there is a possibility that an amount equal to one-half of the difference may have been posted to the wrong side of another ledger account.

(vii) The difference may also indicate a complete omission of a posting.

(viii) If the difference is a multiple of 9 or divisible by 9. the mistake could be due to the transposition of figures.

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Q. If the trial balance do not agree after transferring the balance of ledger accounts including cash and bank balance and also errors are not located timely, then the trial balance is tallied by transferring the difference of debit and credit side to an account known as -

Q. If the trial balance do not agree after transferring the balance of all ledger accounts including cash and bank balance and also errors are not located timely, then the trial balance is tallied by transferring the difference of debit and credit side to an account knows as_____________.

An inexperienced Accountant has prepared the following Trial Balance as you are expert in Accountancy find out errors and redraft the Trial Balance.

Trial Balance as on 30th March, 2002
Particulars	L.F.	Debit balance Amount Rs	Credit balance Amount Rs
Opening Stock		10,000
Purchases		40,000
Sales			50,000
Machinery			50,000
Goodwill		50,000
Wages			200
Commission Received		500
Sundry Debtors		40,000
Sundry Creditors			20,500
Bills Payable		50,000
Postage & Telegrams		500
Interest received		200
Capital			70,000
Commission allowed			500
		1,91,200	1,91,200

State whether the following statements are True or False-

1) A trial balance can agree in spite of certain errors.
2) Errors committed due to lack of accounting knowledge are errors of omission.
3) Trial balance is prepared from the balance of ledger accounts.
4) Rectification entries are passed in cash book.
5) Single sided errors affect only one account.
6) Suspense account is automatically closed after rectification of all errors.
7) Errors affecting the agreement of trial balance are called on side errors.
8) There is no need to open a suspense account if the trial balance agrees.
9) All the errors can be rectified only through suspense account.
10) Compensating errors affect the agreement of trial balance.

Q. State whether the following statement is True or False.
Preparation of trial balance helps in locating accounting errors.

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