AIPB Mastering Corrections of Accounting Errors Questions & Answers 2024/2025

AIPB Mastering Corrections of Accounting Errors Questions & Answers 2024/2025 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 - ANSWER-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 - ANSWER-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 - ANSWER-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 - ANSWER-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 - ANSWER-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 - ANSWER-c. $505 What dollar amount should be deducted from the balance per books? a. $460 b. $505 c. $550 d. $1,625 - ANSWER-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 - ANSWER-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 c. collection of a receivable debited to Cash for $300 and credited to Accounts Payable for $300 d. payment of an account debited to Accounts Payable for $1,000 and debited to Cash for $1,000 - ANSWER-c. collection of a receivable debited to Cash for $300 and credited to Accounts Payable for $300 Which account should not appear on a post-closing trail balance? a. Sales b. Retained Earnings c. Accumulated Depreciation d. Discount on Bonds Payable - ANSWER-a. Sales Which of these errors is easiest to find and correct? a. failure to record a transaction b. crediting Sales Revenue instead of Accounts Receivable for a payment c. the Accumulated Depreciation balance in the debit column of a trial balance d. incorrect computation of the Notes Payable account balance - ANSWER-c. the Accumulated Depreciation balance in the debit column of a trial balance In November, 20X0, your company sublets space for $500 and receives advance rent of $1,500 for three months - November, December, and January - that is credited to Rent Revenue. Before the 20X0 books are closed, you discover that at year-end, 20X0, no adjusting entry was made to Rent Revenue. To correct this omission ... a. Rent Revenue should be debited for $500 b. Rent Revenue should be debited for $1,000 c. Rent Revenue should be debited for $1,500 d. Rent Received in Advance should be credited for $1,000 - ANSWER-a. Rent Revenue should be debited for $500 In early November, 20X0, your company makes a $4,500 advance payment for six months' insurance and debits Prepaid Insurance for the entire amount. Before the books are closed for the year, you discover that no adjusting entry has been made. To correct this error, you will ... a. debit Insurance Expense for $3,000 b. credit Insurance Expense for $3,000 c. debit Insurance Expense for $1,500 d. debit Prepaid Insurance for $1,500 - ANSWER-c. debit Insurance Expense for $1,500 The Allowance for Doubtful Accounts ... a. has a normal debit balance b. has a normal credit balance c. appears only on the post-closing trial balance d. any of the above - ANSWER-b. has a normal credit balance Which of the following might produce an account balance that is not normal? a. underpayment of an account payable b. overpayment of an account receivable by a customer c. under accrual of interest expense d. none of the above - ANSWER-b. overpayment of an account receivable by a customer In a trial balance, if the total debits do not equal the total credits and the difference is divisible by 2, the error could be the result of ... a. adding or deleting one or more zeros to or from an amount b. reversing two digits continues...