CIMA BA3 · Chapter 7
Errors, the trial balance and suspense accounts MCQs with Answers
10 multiple-choice questions on Errors, the trial balance and suspense accounts for CIMA BA3 Fundamentals of Financial Accounting. Try each one before revealing the answer and explanation.
Practise this chapter interactivelyQuestion 1
The cost of a new delivery van was debited to the motor expenses account. What type of error is this?
- A) Error of commission
- B) Error of original entry
- C) Transposition error
- D) Error of principle
Show answer & explanation
Answer: D) Error of principle
An error of principle records a transaction in the wrong class of account; here capital expenditure has been treated as revenue expenditure. The trial balance still agrees because equal debits and credits were made.
Question 2
A payment received from customer P. Jones was credited to the account of customer P. James in the receivables ledger. What type of error is this?
- A) Error of principle
- B) Error of commission
- C) Error of omission
- D) Compensating error
Show answer & explanation
Answer: B) Error of commission
An error of commission posts an amount to the wrong account of the correct type; both are receivable accounts. It does not affect the trial balance or the receivables control account total.
Question 3
Which of the following errors would cause the trial balance totals to disagree?
- A) Cash of $540 received from a customer was debited correctly in the cash book but credited to the receivables control account as $450
- B) A sales invoice was omitted entirely from the books
- C) A purchase on credit was recorded as Debit Payables, Credit Purchases
- D) Rent paid was debited to the rates account
Show answer & explanation
Answer: A) Cash of $540 received from a customer was debited correctly in the cash book but credited to the receivables control account as $450
Only the first error has unequal debits ($540) and credits ($450), creating a $90 difference. An omission records nothing, a reversal of entries posts equal and opposite amounts, and posting rent to rates is an error of commission; none of these affect the trial balance totals.
Question 4
A trial balance has debit totals of $214,300 and credit totals of $216,110. A suspense account is opened to make it balance. What is the balance on the suspense account?
- A) $1,810 credit
- B) $905 debit
- C) $3,620 debit
- D) $1,810 debit
Show answer & explanation
Answer: D) $1,810 debit
The credit side exceeds the debit side by $216,110 - $214,300 = $1,810. A debit balance of $1,810 is needed in the suspense account to make the totals agree.
Question 5
A suspense account was opened when a trial balance did not agree. The following errors were then found, and these explain the whole difference: (1) an electricity payment of $680 was correctly credited in the cash book but debited to the electricity account as $860; (2) credit sales of $3,250 were credited to sales but not posted to the receivables control account; (3) discount received of $420 was debited to the payables control account but not posted to the discount received account. What was the original balance on the suspense account?
- A) $2,650 credit
- B) $3,850 debit
- C) $2,650 debit
- D) $3,010 debit
Show answer & explanation
Answer: C) $2,650 debit
Error 1: debits are overstated by $180, so the suspense account needs a credit of $180. Error 2: a debit of $3,250 is missing, so the suspense account needs a debit of $3,250. Error 3: a credit of $420 is missing, so the suspense account needs a credit of $420. Net suspense balance = $3,250 - $180 - $420 = $2,650 debit.
Question 6
A machine costing $12,000 was debited to the repairs account. Which journal entry corrects the error?
- A) Debit Repairs $12,000, Credit Machinery $12,000
- B) Debit Machinery $12,000, Credit Repairs $12,000
- C) Debit Machinery $12,000, Credit Suspense $12,000
- D) Debit Suspense $12,000, Credit Repairs $12,000
Show answer & explanation
Answer: B) Debit Machinery $12,000, Credit Repairs $12,000
The cost must be removed from repairs (credit) and recognised as a non-current asset (debit machinery). Both sides of the original entry were made, so no suspense account entry is involved.
Question 7
A company's draft profit for the year is $45,600. It is then found that closing inventory was understated by $3,000 and an accrual for electricity of $800 was omitted. What is the corrected profit?
- A) $41,800
- B) $43,400
- C) $47,800
- D) $49,400
Show answer & explanation
Answer: C) $47,800
Increasing closing inventory reduces cost of sales and increases profit by $3,000. Recording the accrual increases expenses and reduces profit by $800. Corrected profit = $45,600 + $3,000 - $800 = $47,800.
Question 8
A purchase invoice for $3,980 was recorded in the purchase day book as $3,890 and then posted from there to the ledger. What type of error is this?
- A) Transposition error causing a trial balance difference
- B) Error of principle
- C) Error of commission
- D) Error of original entry
Show answer & explanation
Answer: D) Error of original entry
The wrong amount was entered in the book of prime entry, so both the debit and the credit are posted at $3,890. This is an error of original entry and does not cause a trial balance difference, even though digits were transposed.
Question 9
A trial balance fails to agree by $540. Which of the following transposition errors, made when posting one side of an entry only, could explain this difference?
- A) $6,170 posted as $6,710
- B) $1,560 posted as $1,650
- C) $4,320 posted as $4,302
- D) $3,980 posted as $3,890
Show answer & explanation
Answer: A) $6,170 posted as $6,710
6,710 - 6,170 = 540. The other errors give differences of 90, 18 and 90. A difference caused by transposing digits is always divisible by 9, which is a useful clue when looking for errors.
Question 10
A cash sale of $900 was recorded by debiting both the bank account and the sales account with $900. A suspense account was opened for the difference. Which journal corrects the error?
- A) Debit Sales $900, Credit Suspense $900
- B) Debit Suspense $900, Credit Sales $900
- C) Debit Suspense $1,800, Credit Sales $1,800
- D) Debit Sales $1,800, Credit Suspense $1,800
Show answer & explanation
Answer: C) Debit Suspense $1,800, Credit Sales $1,800
Sales should have been credited with $900 but was debited with $900, so a credit of $1,800 is needed to reverse the wrong debit and record the correct credit. Debits exceeded credits by $1,800, so the suspense account has a $1,800 credit balance, which is cleared by debiting suspense.