AIPB Mastering Correction of
Accounting Errors Exam Prep (Latest
Update ) Questions &
Answers | Grade A | 100% Correct
(Verified Solutions)
Section 1: Where Errors Occur and How They Are Found
1. What is a common source of accounting errors?
Answer: Incorrect journal entries or postings
Rationale: Errors often arise from mistakes in recording transactions or posting to the
general ledger.
2. What is a transposition error?
Answer: Switching two digits in a number
Rationale: For example, recording $740 as $470.
3. What is a slide error?
Answer: Misplacing the decimal point
Rationale: For example, recording $700 as $7,000.
4. How can a transposition error be detected in a trial balance?
Answer: The difference between debits and credits is divisible by 9
Rationale: Transposition errors create a difference that is always divisible by 9.
,5. What is a classification error?
Answer: Recording a transaction in the wrong account
Rationale: For example, debiting Utilities Expense instead of Insurance Expense.
6. A cash sale of $700 was recorded as $7,000. What type of error is this?
Answer: Slide error
Rationale: The decimal point was misplaced, multiplying the amount by 10.
7. A $1,000 equipment purchase was debited to Supplies. What type of error is this?
Answer: Classification error
Rationale: The transaction was recorded in the wrong account.
8. What is an omission error?
Answer: Failing to record a transaction
Rationale: For example, not booking a purchase of supplies.
9. Annual depreciation was calculated using a useful life of 8 years instead of 6 years.
What type of error is this?
Answer: Use of improper accounting estimate
Rationale: Incorrect estimates affect financial statement accuracy.
10. How can comparing this year’s trial balance with last year’s help?
Answer: It identifies errors in accruals or deferrals
Rationale: Differences may reveal over- or under-statement of revenues or expenses.
11. What is a common cause of trial balance errors divisible by 2?
Answer: Showing a debit balance as a credit or vice versa
Rationale: This reverses the account’s normal balance.
12. A $740 customer check was recorded as $470. What type of error is this?
Answer: Transposition error
Rationale: The digits 7 and 4 were switched.
, 13. What is the normal balance of the Allowance for Doubtful Accounts?
Answer: Credit balance
Rationale: It is a contra-asset account, reducing Accounts Receivable.
14. Which account balance is likely an error?
Answer: Accumulated Depreciation with a debit balance
Rationale: Accumulated Depreciation typically has a credit balance.
15. What is a doubling error?
Answer: Recording a transaction twice
Rationale: This inflates account balances.
Section 2: Bank Reconciliations
16. What is the purpose of a bank reconciliation?
Answer: To ensure the ledger Cash account matches the bank statement
Rationale: It identifies discrepancies like outstanding checks.
17. What is an outstanding check?
Answer: A check written but not yet cleared by the bank
Rationale: These reduce the bank balance during reconciliation.
18. What is a deposit in transit?
Answer: A deposit recorded but not yet reflected in the bank statement
Rationale: These increase the bank balance during reconciliation.
19. A bank service charge requires an adjustment to which account?
Answer: Ledger Cash
Rationale: Service charges reduce the ledger Cash balance.
Accounting Errors Exam Prep (Latest
Update ) Questions &
Answers | Grade A | 100% Correct
(Verified Solutions)
Section 1: Where Errors Occur and How They Are Found
1. What is a common source of accounting errors?
Answer: Incorrect journal entries or postings
Rationale: Errors often arise from mistakes in recording transactions or posting to the
general ledger.
2. What is a transposition error?
Answer: Switching two digits in a number
Rationale: For example, recording $740 as $470.
3. What is a slide error?
Answer: Misplacing the decimal point
Rationale: For example, recording $700 as $7,000.
4. How can a transposition error be detected in a trial balance?
Answer: The difference between debits and credits is divisible by 9
Rationale: Transposition errors create a difference that is always divisible by 9.
,5. What is a classification error?
Answer: Recording a transaction in the wrong account
Rationale: For example, debiting Utilities Expense instead of Insurance Expense.
6. A cash sale of $700 was recorded as $7,000. What type of error is this?
Answer: Slide error
Rationale: The decimal point was misplaced, multiplying the amount by 10.
7. A $1,000 equipment purchase was debited to Supplies. What type of error is this?
Answer: Classification error
Rationale: The transaction was recorded in the wrong account.
8. What is an omission error?
Answer: Failing to record a transaction
Rationale: For example, not booking a purchase of supplies.
9. Annual depreciation was calculated using a useful life of 8 years instead of 6 years.
What type of error is this?
Answer: Use of improper accounting estimate
Rationale: Incorrect estimates affect financial statement accuracy.
10. How can comparing this year’s trial balance with last year’s help?
Answer: It identifies errors in accruals or deferrals
Rationale: Differences may reveal over- or under-statement of revenues or expenses.
11. What is a common cause of trial balance errors divisible by 2?
Answer: Showing a debit balance as a credit or vice versa
Rationale: This reverses the account’s normal balance.
12. A $740 customer check was recorded as $470. What type of error is this?
Answer: Transposition error
Rationale: The digits 7 and 4 were switched.
, 13. What is the normal balance of the Allowance for Doubtful Accounts?
Answer: Credit balance
Rationale: It is a contra-asset account, reducing Accounts Receivable.
14. Which account balance is likely an error?
Answer: Accumulated Depreciation with a debit balance
Rationale: Accumulated Depreciation typically has a credit balance.
15. What is a doubling error?
Answer: Recording a transaction twice
Rationale: This inflates account balances.
Section 2: Bank Reconciliations
16. What is the purpose of a bank reconciliation?
Answer: To ensure the ledger Cash account matches the bank statement
Rationale: It identifies discrepancies like outstanding checks.
17. What is an outstanding check?
Answer: A check written but not yet cleared by the bank
Rationale: These reduce the bank balance during reconciliation.
18. What is a deposit in transit?
Answer: A deposit recorded but not yet reflected in the bank statement
Rationale: These increase the bank balance during reconciliation.
19. A bank service charge requires an adjustment to which account?
Answer: Ledger Cash
Rationale: Service charges reduce the ledger Cash balance.
