Which of the following error cannot be disclosed by trial balance?
Which of the following error cannot be disclosed by trial balance?
The correct option is D All of the above
There are some errors in preparing the trial balance which does
not affect the equality of debits and credits of the trial balance but violates
its objective of checking the accuracy of the accounts. These are errors that
remain undetected in spite of the agreement of a trial balance.
Error of principle – When the fundamental principle of
accounting is violated while preparing the accounts, this is known as error of
principle. These errors are made when there’s no proper distinction between
capital and revenue items i.e., capital expenditure being treated as revenue
expenditure and vice versa.
Compensating errors – Compensating errors is when the
effect of one error is neutralized by some other errors. For example, if Ram’s
account is debited with 500 instead of 5000 and on the other hand Shyam’s account is debited with 5000 instead of 500.
This situation would not have any effect on the trial balance .
Error of complete omission – If a transaction is
completely omitted or not recorded in the journal or any subsidiary books, it
is termed as error of omission. Such
error will not effect the trial balance as it is not recorded on the debit side
of an account nor on the credit side of another account.
There are some errors in preparing the trial balance which does not affect the equality of debits and credits of the trial balance but violates its objective of checking the accuracy of the accounts. These are errors that remain undetected in spite of the agreement of a trial balance.
Error of principle – When the fundamental principle of accounting is violated while preparing the accounts, this is known as error of principle. These errors are made when there’s no proper distinction between capital and revenue items i.e., capital expenditure being treated as revenue expenditure and vice versa.
Compensating errors – Compensating errors is when the effect of one error is neutralized by some other errors. For example, if Ram’s account is debited with 500 instead of 5000 and on the other hand Shyam’s account is debited with 5000 instead of 500. This situation would not have any effect on the trial balance .
Error of complete omission – If a transaction is completely omitted or not recorded in the journal or any subsidiary books, it is termed as error of omission. Such error will not effect the trial balance as it is not recorded on the debit side of an account nor on the credit side of another account.
