Gce Model Questions Vol1 2021 Financial Accounting Question 9

Practice objective / multiple choice question 9 from the 2021 Gce Model Questions Vol1 Financial Accounting examination.

Gce Model Questions Vol1 2021 Financial Accounting Objective / Multiple Choice Medium Difficulty
Question 9 GCE_MODEL_QUESTIONS_VOL1 • 2021 • FINANCIAL_ACCOUNTING • objective

A payment of \(£2{,}340\) to a supplier was recorded as \(£2{,}430\) in the cash book. The same amount was correctly entered in the purchases ledger. No other entries relate to this transaction. Determine the effect of this error on the trial balance, identify the type of error, and propose the adjusting entry to correct the cash book.

Answer Options

A. Error: transposition error (£2,340 recorded as £2,043). Effect: trial balance out of balance by £297 (debit side short). Adjusting entry: Debit Cash £297, Credit Suspense £297
Correct Answer B. Error: transposition error (£2,340 recorded as £2,430). Effect: trial balance out of balance by £90 (debit side short). Adjusting entry: Debit Cash £90, Credit Suspense £90
C. Error: omission of cash receipt of £2,340 (omission). Effect: trial balance out of balance by £2,340 (debit side short). Adjusting entry: Debit Cash £2,340, Credit Suspense £2,340
D. Error: reversal error (£2,340 recorded as a credit). Effect: trial balance out of balance by £4,680 (debit side short). Adjusting entry: Debit Cash £4,680, Credit Suspense £4,680
Correct Answer
B
Correct Option:
Error: transposition error (£2,340 recorded as £2,430). Effect: trial balance out of balance by £90 (debit side short). Adjusting entry: Debit Cash £90, Credit Suspense £90

About This Question

This is Gce Model Questions Vol1 2021 Financial Accounting Question 9. It is one of the objective questions from the 2021 Gce Model Questions Vol1 Financial Accounting examination.

Difficulty level: Medium .

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