CIE Accounting Paper-1: Specimen Questions 92 - 94 of 214

Question number: 92

MCQ▾

Question

Identify the type error involved in the transaction:

Goods of $6000, purchased on credit from Vincent are recorded in the books as $6500.

Choices

Choice (4) Response
a.

Error of recording

b.

Error of posting

c.

Error of casting

d.

Errors of commission

Answer

a.

Explanation

The error arises when transaction is wrongly recorded in the books of original entry. In the above transaction $6000 was wrongly recorded in the books as $6500 which represents overcasting of $500.

Question number: 93

MCQ▾

Question

Trial balance is prepared for finding out of ________

Choices

Choice (4) Response
a.

Arithmetical accuracy

b.

Balance the transaction

c.

Financial position

d.

Profit or Loss

Answer

a.

Explanation

Trial balance is a statement which shows the debit balances and credit balances of all transaction in the ledger. The main objective of preparing a trial balance is to check the arithmetical accuracy and to locate the errors.

Question number: 94

MCQ▾

Question

How is carriage outwards recorded in final accounts?

Choices

Choice (4) Response
a.

Debit Trading Account

b.

Debit Profit and Loss Account

c.

Credit Profit and Loss Account

d.

Credit Trading Account

Answer

b.

Explanation

Trading accounts deals with the result of buying and selling of goods whereas Profit and loss account shows the business activity. Carriage outwards are indirect expenses which are chargeable during the activities of the business.

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