Correction of Errors (Copy)
Topic 3.2: Correction of Errors – Quiz
O Level and IGCSE Accounting
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
1. What is the purpose of a suspense account?
A. To store unrecorded revenue
B. To temporarily balance the trial balance when errors exist
C. To record dishonoured cheques
D. To adjust depreciation
2. Which type of error requires a suspense account to correct?
A. Error of omission
B. Error of principle
C. One-sided error
D. Error of original entry
3. Which of the following errors will NOT require a suspense account?
A. Posting only one side of a transaction
B. Reversing debit and credit entries
C. Posting correct amounts to incorrect accounts
D. Undercasting a ledger total
4. The trial balance failed to balance by $500. A suspense account was opened. What is the opening entry?
A. Debit Suspense $500
B. Credit Suspense $500
C. Debit Capital $500
D. Credit Cash $500
5. If the debit side of the trial balance exceeds the credit, how is the suspense account opened?
A. Credit Suspense
B. Debit Suspense
C. No need for suspense
D. Debit Capital
6. What is the correct entry to correct an error where rent of $300 was debited to wages?
A. Debit Wages $300, Credit Rent $300
B. Debit Rent $300, Credit Wages $300
C. Debit Suspense $300, Credit Rent $300
D. Debit Rent $150, Credit Wages $150
7. What effect does correcting an error of principle have on profit?
A. No effect
B. May increase or decrease profit
C. Always increases profit
D. Always decreases profit
8. Which of the following errors will affect the statement of financial position?
A. Capital entered on both sides
B. Bank debited instead of debtor
C. Wages posted twice
D. Sales recorded in purchases
9. How is an error corrected through a journal entry?
A. By reversing and re-posting the wrong entry
B. By deleting old entries
C. By updating only the trial balance
D. By preparing a new bank reconciliation
10. If cash received from Sarah $200 is not posted to her account, how is it corrected?
A. Debit Suspense, Credit Sarah
B. Debit Sarah, Credit Suspense
C. Debit Cash, Credit Sarah
D. Debit Suspense, Credit Cash
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
11. An error is found after profit is calculated. What should be done?
A. Ignore it
B. Adjust profit accordingly
C. Open new ledgers
D. Alter sales figures only
12. Which error affects both the income statement and the statement of financial position?
A. Wages recorded twice
B. Purchases entered as sales
C. Debtor account understated
D. Rent omitted
13. What is the purpose of journal entries in correcting errors?
A. To update the bank account
B. To close ledger accounts
C. To properly reflect double-entry corrections
D. To record income only
14. Which account is credited to correct a sales undercast of $100?
A. Suspense
B. Bank
C. Sales
D. Debtors
15. An error in sales returns affects which of the following?
A. Gross profit
B. Statement of financial position only
C. Statement of changes in equity
D. No part of the accounts
16. If an entry is made in the wrong class of account, it is:
A. Error of commission
B. Error of omission
C. Error of original entry
D. Error of principle
17. Which of the following could result in a suspense account balance?
A. Posting of both sides of a transaction to wrong accounts
B. One-sided entry
C. Error of omission
D. Posting correct figures to wrong accounts
18. How should suspense be treated once all errors are corrected?
A. It becomes a permanent account
B. It is closed and balance is eliminated
C. It appears in the income statement
D. It is transferred to drawings
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
19. Which error will NOT cause a difference in the trial balance totals?
A. Wrong amount posted on one side only
B. Error of omission
C. Posting to wrong side
D. Recording in wrong person’s account
20. Suspense account appears in:
A. Final accounts only
B. Income statement only
C. Balance sheet only
D. Trial balance and temporary ledger
21. If the suspense account remains open after corrections, it indicates:
A. Trial balance is correct
B. Profit is understated
C. Not all errors are located
D. Income is overstated
22. If purchase of furniture is wrongly recorded as purchases, it is:
A. Error of commission
B. Error of principle
C. Error of omission
D. Error of reversal
23. Which account is involved if a cash sale of $150 is entered only in the cash account?
A. Sales
B. Purchases
C. Capital
D. Suspense
24. How will correcting a cash discount omission affect profit?
A. Increase profit
B. Decrease profit
C. No effect
D. Only affect capital
25. When suspense is used, what is always true?
A. A two-sided error occurred
B. Trial balance did not balance
C. Assets were misstated
D. Profit was incorrect
26. A rent payment of $500 was entered twice. What is the correction?
A. Debit Rent $500, Credit Bank $500
B. Debit Suspense $500, Credit Rent $500
C. Debit Rent $250, Credit Suspense $250
D. Debit Suspense $500, Credit Bank $500
27. The effect of correcting an error on profit depends on:
A. If the error affected an income or expense account
B. Whether assets were increased
C. Whether cash changed
D. Whether it was in sales or purchases
28. If sales were understated by $800, profit will be:
A. Understated
B. Overstated
C. Unchanged
D. Not measurable
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
29. Correcting a one-sided error involves:
A. Suspense account
B. Income summary
C. Trading account
D. Reconciliation account
30. A suspense account can be described as:
A. A long-term investment
B. A temporary account for differences
C. A permanent liability
D. An account for non-current assets
Answer key and explanations
Topic 3.2 – Correction of Errors
O Level and IGCSE Accounting
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
1. Correct Answer: B
Explanation: A suspense account is temporarily used when the trial balance does not agree due to errors.
2. Correct Answer: C
Explanation: One-sided errors affect only one account and cause imbalance, requiring a suspense account.
3. Correct Answer: C
Explanation: Using correct amounts in wrong accounts is a two-sided error that doesn’t affect the trial balance.
4. Correct Answer: A
Explanation: If debit side is short, debit suspense to balance the trial balance.
5. Correct Answer: B
Explanation: Debit suspense to make total debits equal total credits when the credit side is short.
6. Correct Answer: B
Explanation: The rent account should have been debited instead of wages, so reverse the wrong and apply the correct.
7. Correct Answer: B
Explanation: Errors of principle affect expense/income classifications and may alter profit up or down.
8. Correct Answer: C
Explanation: Recording an expense (wages) twice will decrease profit and misstate liabilities or expenses in the SFP.
9. Correct Answer: A
Explanation: Correction is done by reversing the wrong entry and inserting the correct one through a journal.
10. Correct Answer: B
Explanation: The customer’s account was not credited, so it needs to be credited and suspense debited.
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
11. Correct Answer: B
Explanation: Profit must be adjusted to reflect corrected expenses or incomes.
12. Correct Answer: A
Explanation: Wages affect both profit and liabilities (if unpaid), hence both FS and IS are impacted.
13. Correct Answer: C
Explanation: Journal entries help correct errors while maintaining double entry system integrity.
14. Correct Answer: C
Explanation: Sales were understated, so credit Sales to correct and restore proper income level.
15. Correct Answer: A
Explanation: Sales returns reduce sales, and hence affect gross profit.
16. Correct Answer: D
Explanation: Furniture is a non-current asset; recording it as a purchase is a principle error.
17. Correct Answer: B
Explanation: One-sided errors cause imbalance and require suspense to temporarily adjust.
18. Correct Answer: B
Explanation: Suspense is closed once all correcting entries are passed and accounts are balanced.
19. Correct Answer: D
Explanation: Posting to the wrong person’s account (but same type) doesn’t affect the trial balance.
20. Correct Answer: D
Explanation: Suspense appears in the trial balance and is a temporary measure.
21. Correct Answer: C
Explanation: If suspense still exists, some errors remain uncorrected.
22. Correct Answer: B
Explanation: Furniture is an asset; classifying it as purchases (expense) is a principle error.
23. Correct Answer: A
Explanation: Only cash is entered; sales (credit side) is missing. Correction involves the sales account.
24. Correct Answer: A
Explanation: If a discount is omitted, profit is understated. Correcting it increases profit.
25. Correct Answer: B
Explanation: Suspense is opened when the trial balance doesn’t agree, not necessarily due to two-sided errors.
26. Correct Answer: B
Explanation: Rent was overstated. To correct, reduce rent by crediting it and debit suspense.
27. Correct Answer: A
Explanation: If error affected income or expense, it will impact profit directly.
28. Correct Answer: A
Explanation: Understated sales lead to understated profit.
29. Correct Answer: A
Explanation: One-sided errors are corrected using suspense accounts to restore double entry.
30. Correct Answer: B
Explanation: A suspense account is a temporary account used to store differences until resolved.
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course