MASTERING CORRECTION OF
ACCOUNTING ERRORS COMPLETELY
SOLVED
Internal accounting controls...
a. are part of every company's accounting system
b. prevent accounting errors
c. guarantee reliable accounting information
d. help to ensure the reliability of accounting information - ANSWER d
Which of the following is not used to detect accounting errors?
a. monthly bank reconciliations
b. prior period adjustments
c. monthly trial balances
d. internal audits - ANSWER b
If depreciation expense of $1,000 is posted as $100, this is...
a. a transposition error
b. a classification error
c. a slide error
d. use of an incorrect accounting principle - ANSWER c
This is a slide error because the decimal point has been moved one digit to the left.
If a company calculates bad debt expenses at 1% of sales but the percentage used was
5% of sales, this is...
a. a transposition error
b. use of an improper estimate
c. a slide error
d. use of an incorrect accounting principle - ANSWER b
SiliCo painted its building at a cost of $10,000 and decided to capitalize it (debit
Buildings), instead of expensing it (debit Repairs and Maintenance Expense). This is...
a. a transposition error
b. a classification error
c. an improper estimate
d. use of an incorrect accounting principle - ANSWER d
,A $300 payment of an electric bill debited to Cash is a(n) ______ error. - ANSWER
posting
The correction of an error is determined by which ____ are affected and ____ the error
was found. - ANSWER accounts; when
The ___ ___ helps to reveal errors by verifying that total ____ ____ debits and credits
are in balance. - ANSWER trial balance; ledger accounts
Errors may be uncovered in the year-end financial audit by the ____ ____. - ANSWER
external auditor
List three routine accounting procedures during which accounting errors may be
discovered. - ANSWER 1. Monthly bank reconciliation
2. Preparation of the trial balance
3. Review of periodic adjustments to the accounts
4. Routine internal audits
5. Year-end financial audit
Name seven common types of accounting errors. - ANSWER 1. Omission (failing to
record an event)
2. Accrual or deferral error
3. Classification error
4. Arithmetic mistake
5. Use of an incorrect accounting principle
6. Use of an improper estimate
7. Transposition
8. Slide
9. Posting error
Which of the following is not an accounting error?
a. failure to post an entry to the proper account
b. failure to post the proper amount to an account
c. failure to record a customer's payment
d. failure to record that a bill has been contested by a customer - ANSWER d
Your company's payment of $500 was debited to Cash. This is...
a. a posting error
b. a classification error
c. an arithmetic mistake
d. a slide - ANSWER a
A rent payment check issued for $450 was recorded as a credit to Cash for $540. This
is...
, a. a slide
b. an incorrect account classification
c. an arithmetic mistake
d. a transposition error - ANSWER d
CabotCo's accountant forgot to record annual interest expense. This is...
a. a transposition error
b. an arithmetic mistake
c. use of an incorrect accounting principle
d. an accrual error - ANSWER d
An accounting error is defined as the incorrect ____ and ____ of facts about the
business that existed at the time a(n) ____ or ____ was recorded. - ANSWER
recording; reporting; event; transaction
Most differences between the end-of-month bank balance and cash account balance
are caused by differences in _____. - ANSWER timing
An error in depreciation expense is likeliest to be discovered when ____ are made to
the accounts. - ANSWER adjustments
Name three specific accounting activities that may uncover errors. - ANSWER 1.
Monthly bank reconciliation
2. Preparation of the trial balance
3. Review of periodic adjustments to the accounts
4. Routine internal audits
5. Year-end financial audit
6. By chance
To find the correct bank statement cash balance for a reconciliation:
a. deduct from the end-of-month bank balance all checks outstanding
b. deduct from the end-of-month bank balance only those checks outstanding that were
written in the current period
c. deduct from the end-of-month bank balance checks outstanding that were written in
the current period and add checks outstanding that were written in previous periods
d. add to the end-of-month bank balance all checks outstanding - ANSWER a
Adjusted June 30 Cash balance $x,xxx
Numbers 1-5 describe the action to take with the items in the bank reconciliation:
1 - Add to the end-of-month bank balance
2 - Deduct from the end-of-month bank balance
3 - Add to the end-of-month Cash balance
ACCOUNTING ERRORS COMPLETELY
SOLVED
Internal accounting controls...
a. are part of every company's accounting system
b. prevent accounting errors
c. guarantee reliable accounting information
d. help to ensure the reliability of accounting information - ANSWER d
Which of the following is not used to detect accounting errors?
a. monthly bank reconciliations
b. prior period adjustments
c. monthly trial balances
d. internal audits - ANSWER b
If depreciation expense of $1,000 is posted as $100, this is...
a. a transposition error
b. a classification error
c. a slide error
d. use of an incorrect accounting principle - ANSWER c
This is a slide error because the decimal point has been moved one digit to the left.
If a company calculates bad debt expenses at 1% of sales but the percentage used was
5% of sales, this is...
a. a transposition error
b. use of an improper estimate
c. a slide error
d. use of an incorrect accounting principle - ANSWER b
SiliCo painted its building at a cost of $10,000 and decided to capitalize it (debit
Buildings), instead of expensing it (debit Repairs and Maintenance Expense). This is...
a. a transposition error
b. a classification error
c. an improper estimate
d. use of an incorrect accounting principle - ANSWER d
,A $300 payment of an electric bill debited to Cash is a(n) ______ error. - ANSWER
posting
The correction of an error is determined by which ____ are affected and ____ the error
was found. - ANSWER accounts; when
The ___ ___ helps to reveal errors by verifying that total ____ ____ debits and credits
are in balance. - ANSWER trial balance; ledger accounts
Errors may be uncovered in the year-end financial audit by the ____ ____. - ANSWER
external auditor
List three routine accounting procedures during which accounting errors may be
discovered. - ANSWER 1. Monthly bank reconciliation
2. Preparation of the trial balance
3. Review of periodic adjustments to the accounts
4. Routine internal audits
5. Year-end financial audit
Name seven common types of accounting errors. - ANSWER 1. Omission (failing to
record an event)
2. Accrual or deferral error
3. Classification error
4. Arithmetic mistake
5. Use of an incorrect accounting principle
6. Use of an improper estimate
7. Transposition
8. Slide
9. Posting error
Which of the following is not an accounting error?
a. failure to post an entry to the proper account
b. failure to post the proper amount to an account
c. failure to record a customer's payment
d. failure to record that a bill has been contested by a customer - ANSWER d
Your company's payment of $500 was debited to Cash. This is...
a. a posting error
b. a classification error
c. an arithmetic mistake
d. a slide - ANSWER a
A rent payment check issued for $450 was recorded as a credit to Cash for $540. This
is...
, a. a slide
b. an incorrect account classification
c. an arithmetic mistake
d. a transposition error - ANSWER d
CabotCo's accountant forgot to record annual interest expense. This is...
a. a transposition error
b. an arithmetic mistake
c. use of an incorrect accounting principle
d. an accrual error - ANSWER d
An accounting error is defined as the incorrect ____ and ____ of facts about the
business that existed at the time a(n) ____ or ____ was recorded. - ANSWER
recording; reporting; event; transaction
Most differences between the end-of-month bank balance and cash account balance
are caused by differences in _____. - ANSWER timing
An error in depreciation expense is likeliest to be discovered when ____ are made to
the accounts. - ANSWER adjustments
Name three specific accounting activities that may uncover errors. - ANSWER 1.
Monthly bank reconciliation
2. Preparation of the trial balance
3. Review of periodic adjustments to the accounts
4. Routine internal audits
5. Year-end financial audit
6. By chance
To find the correct bank statement cash balance for a reconciliation:
a. deduct from the end-of-month bank balance all checks outstanding
b. deduct from the end-of-month bank balance only those checks outstanding that were
written in the current period
c. deduct from the end-of-month bank balance checks outstanding that were written in
the current period and add checks outstanding that were written in previous periods
d. add to the end-of-month bank balance all checks outstanding - ANSWER a
Adjusted June 30 Cash balance $x,xxx
Numbers 1-5 describe the action to take with the items in the bank reconciliation:
1 - Add to the end-of-month bank balance
2 - Deduct from the end-of-month bank balance
3 - Add to the end-of-month Cash balance
