AIPB Mastering Corrections of Accounting Errors Exam #1
Questions with Correct Answers
While reviewing a trail balance, you notice the following account balances. Which
one is likely to be an error?
a. Inventory with a debit balance of $43,000
b. Discount on Bonds Payable with a debit balance of $4,000
c. Accumulated Depreciation with a debit balance of $8,000
d. Allowance for Doubtful Accounts with a credit balance of $23,000 - ✔✔c.
Accumulated Depreciation with a debit balance of $8,000
Debiting an insurance payment to Rent Expense instead of Insurance Expense is
an example of ....
a. an accrual error
b. a deferral error
c. a classification error
d. use of an incorrect accounting principle - ✔✔c. a classification error
InCo. recorded a customer's $20,000 check as a $20,000 debit to Cash and as a
$2,000 credit to Accounts Receivable. This is an example of ....
a. an oversight
b. an incorrect account classification
c. a transposition error
d. a slide error - ✔✔d. a slide error
,During a bank reconciliation, a deposit recorded by the bank but not in the
company's ledger Cash account is ...
a. added to both the bank balance and the ledger Cash account balance
b. added to the ledger Cash account balance only
c. added to the bank balance only
d. subtracted from the bank balance and added to the ledger Cash account
balance - ✔✔b. added to the ledger Cash account balance only
The bank statement balance of $7,000 does not include a check outstanding of
$1,000, a deposit in transit of $275, and another company's $250 check
erroneously charged against your firm's account The reconciled bank balance is:
a.$6,375
b.$6,580
c.$6,525
d. $6,570 - ✔✔c.$6,525
Using the following information to answer questions 6-8. You are doing a bank
reconciliation for May 20X1. You have a $2,785.00 unadjusted ledger cash balance
and the following data:
Outstanding checks: No. 719, $200, No. 727 $800, No. 732, $625
Deposits in transit, $1,200
Check No. 742 (for repairs) written for $505 but incorrectly recorded as $550
, NSF check from a customer, $500
Bank service charge for May, $5
Balance per bank statement, $2,750
What dollar amount should be deducted from the balance per bank statement?
a. $1,425 b. $1,625 c. $505 d. $2,125 - ✔✔c. $505
What dollar amount should be deducted from the balance per books?
a. $460 b. $505 c. $550 d. $1,625 - ✔✔a. $460
What adjustment will you need to make to company books?
a. a net decrease in Cash of $550
b. a net decrease in Cash of $505
c. a net decrease in Cash of $460
d. a net increase in Cash of $45 - ✔✔c. a net decrease in Cash of $460
Which of the following errors would not be revealed by the trial balance?
a. a sale debited to Accounts Receivable for $500 and credited to Sales for $50
b. a rent check debited to Rent Expense for $975 and credited to Cash for $795
Questions with Correct Answers
While reviewing a trail balance, you notice the following account balances. Which
one is likely to be an error?
a. Inventory with a debit balance of $43,000
b. Discount on Bonds Payable with a debit balance of $4,000
c. Accumulated Depreciation with a debit balance of $8,000
d. Allowance for Doubtful Accounts with a credit balance of $23,000 - ✔✔c.
Accumulated Depreciation with a debit balance of $8,000
Debiting an insurance payment to Rent Expense instead of Insurance Expense is
an example of ....
a. an accrual error
b. a deferral error
c. a classification error
d. use of an incorrect accounting principle - ✔✔c. a classification error
InCo. recorded a customer's $20,000 check as a $20,000 debit to Cash and as a
$2,000 credit to Accounts Receivable. This is an example of ....
a. an oversight
b. an incorrect account classification
c. a transposition error
d. a slide error - ✔✔d. a slide error
,During a bank reconciliation, a deposit recorded by the bank but not in the
company's ledger Cash account is ...
a. added to both the bank balance and the ledger Cash account balance
b. added to the ledger Cash account balance only
c. added to the bank balance only
d. subtracted from the bank balance and added to the ledger Cash account
balance - ✔✔b. added to the ledger Cash account balance only
The bank statement balance of $7,000 does not include a check outstanding of
$1,000, a deposit in transit of $275, and another company's $250 check
erroneously charged against your firm's account The reconciled bank balance is:
a.$6,375
b.$6,580
c.$6,525
d. $6,570 - ✔✔c.$6,525
Using the following information to answer questions 6-8. You are doing a bank
reconciliation for May 20X1. You have a $2,785.00 unadjusted ledger cash balance
and the following data:
Outstanding checks: No. 719, $200, No. 727 $800, No. 732, $625
Deposits in transit, $1,200
Check No. 742 (for repairs) written for $505 but incorrectly recorded as $550
, NSF check from a customer, $500
Bank service charge for May, $5
Balance per bank statement, $2,750
What dollar amount should be deducted from the balance per bank statement?
a. $1,425 b. $1,625 c. $505 d. $2,125 - ✔✔c. $505
What dollar amount should be deducted from the balance per books?
a. $460 b. $505 c. $550 d. $1,625 - ✔✔a. $460
What adjustment will you need to make to company books?
a. a net decrease in Cash of $550
b. a net decrease in Cash of $505
c. a net decrease in Cash of $460
d. a net increase in Cash of $45 - ✔✔c. a net decrease in Cash of $460
Which of the following errors would not be revealed by the trial balance?
a. a sale debited to Accounts Receivable for $500 and credited to Sales for $50
b. a rent check debited to Rent Expense for $975 and credited to Cash for $795
