What went wrong when the king rode under the arch?

It was too low and knocked off his crown

How does the chain of blame unfold in the poem?

Each accused person blames another, ending with the king's own changes

What is a trial balance?

It is a statement showing the debit and credit balances of all ledger accounts to verify the arithmetical accuracy of posting.

Name the methods of preparing a trial balance.

The totals method, the balances method, and the totals-cum-balances method.

Does the agreement of a trial balance mean there are no errors?

No, certain errors such as errors of omission, principle and compensating errors do not affect the agreement of the trial balance.

What is an error of principle?

It is an error in which a transaction is recorded against accounting principles, such as treating a capital expenditure as a revenue expense.

What is a compensating error?

It is a situation where the effect of one error is cancelled by the effect of another, so the trial balance still agrees.

Which errors affect the agreement of the trial balance?

One-sided errors, such as wrong casting or posting to the wrong side, affect the agreement of the trial balance.

How are errors that do not affect the trial balance rectified?

They are corrected by passing a rectifying journal entry, since both debit and credit are involved.

What is a suspense account?

It is a temporary account opened to make the trial balance agree until one-sided errors affecting the trial balance are found and rectified.

When is a suspense account closed?

It is closed when all the one-sided errors that caused the difference have been located and rectified.

CBSE · Senior secondary

CBSE Class 11 — Notes, Chapters & Practice Quizzes

Q: State the objectives of preparing a trial balance.

To ascertain the arithmetical accuracy of the ledger, to help locate errors, and to assist in the preparation of financial statements.

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Chapter 6: Trial Balance and Rectification of Errors — Class 11 Accountancy

Accountancy · 9 chapters

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Chapter 6: Trial Balance and Rectification of Errors

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A trial balance is prepared mainly to verify the:

Summary

A trial balance is a statement showing the balances, or the totals of debits and credits, of all the ledger accounts on a particular date, prepared to verify the arithmetical accuracy of posting. Under the double entry system the total of debit balances should equal the total of credit balances. The objectives of preparing a trial balance are to ascertain the arithmetical accuracy of the ledger, to help locate errors and to assist in preparing the financial statements. It may be prepared by the totals method, the balances method, or the totals-cum-balances method, the balances method being most common. However, the agreement of a trial balance does not guarantee that the books are free from all errors. Errors are classified as errors of commission, errors of omission, errors of principle and compensating errors. Some errors affect the agreement of the trial balance (one-sided errors) while others do not (two-sided errors). When errors are detected, they are rectified: errors that do not affect the trial balance are corrected by passing a rectifying journal entry, while one-sided errors affecting the trial balance are corrected through a suspense account. A suspense account is opened temporarily to make the trial balance agree and is closed when all errors are located and rectified.

Meaning and objectives of trial balanceMethods of preparing a trial balanceClassification of errorsErrors affecting and not affecting the trial balanceRectification of errors and the suspense account

Key terms

Trial Balance

A statement showing the balances or totals of debits and credits of all ledger accounts to verify the arithmetical accuracy of posting.

Error of Commission

An error such as wrong amount, wrong posting or wrong casting committed while recording or posting a transaction.

Error of Omission

An error where a transaction is completely or partially omitted from the books of account.

Error of Principle

An error arising when a transaction is recorded in violation of accounting principles, such as treating capital expenditure as revenue.

Compensating Error

Two or more errors whose effects cancel each other, so the trial balance still agrees.

Suspense Account

A temporary account opened to make the trial balance agree until one-sided errors are located and rectified.

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A statement showing the balances or totals of debits and credits of all ledger accounts to verify the arithmetical accuracy of posting.

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Practice quiz · Trial Balance and Rectification of Errors

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Trial Balance and Rectification of Errors

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