Question

QUESTION NO.1 The incorrect posting to the telephone expense account of an amount spent on electricity will be revealed by completing a trial balance. Is this correct? Explain.

QUESTION NO 2 A trial balance may balance but still contain errors. List some errors that are not disclosed by the trial balance.

Answer 1

Answers

• Answer #1

>NO, The error will not be revealed by completing a trial balance.
>An error can be revealed through completion of trial balance if the total of debits and credit columns of trial balance do not match.
>In the stated answer, telephone expense posting has been posted to electricity expense. This means that one account is debited instead of another.
>This is understate the telephone expense debit balance, BUT will also overstate electricity expense debit balance.
>Hence, overall, debit column will not be affected and hence, trial balance totals will match.

• Answer #2

Errors that cannot be disclosed by the trial balance:
>One expense account debited in place of another expense account.
>Compensatory error, where one account is debited by wrong amount, while other also gets credited by the wrong amount of equal value.
>Asset purchased, recorded as revenue expense.
>Whole transaction gets omitted to be recorded or posted.