Question

What is possible if the trail balance of a company agrees?

• A. There are two mistakes in the recordings made
• B. There may be some mistakes in the recording of books
• C. Both a and b
• D. None of the above

Answer 1

The correct option is C Both a and b

If trial balance agrees, this is assumed that the books of account are arithmetically correct. But it does not confirm that books of account are free from error. Below are the example where even if the trial balance agrees, chance of errors are there:

1) There are two mistakes in the recording made- This is called compensating error where the difference of one error is nullify by the other error.

2) There may be some mistakes in the recording of books- For example, in case of error of principle, the trial balance will agree but the error is prevailing in the books.