Question 3
- What is a trial balance?
- Explain the following types of errors:
(i) omission;
(ii) principle;
(iii) commission;
(iv) original entry.
Observation
Majority of the candidates attempted this question and the performance was fair.
Some of the suggested answers are:
(a) A trial balance is the schedule or list of debit and credit balances extracted from the ledgers to test the arithmetical accuracy of the entries.
OR
A trial balance is the list of all the balances standing on the ledger account and cash book of an organization at a given period.
(bi) Omission: this is an error which occurs when a transaction is not recorded in both
the debit and the credit sides of account.
(ii) Principle: this is an error which occurs when a transaction is entered in the wrong
class of account. '
(iii) Commission: this is an error which occurs when a transaction is entered in wrong person's account.
(iv) Original entry: this is an error which occurs when a wrong amount is entered on both the debit and the credit side of accounts.