Question Tag: Errors

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  • 1 Marks

AAA – Nov 2012 – L3 – AII – Q2 – Overview of Advanced Audit and Assurance

Defines an unintentional mistake in the accounting process resulting in material misstatement.

An unintentional mistake is ……………committed by anyone in the accounting process which results in material misstatement.

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  • 10 Marks

FR – Nov 2020 – L2 – Q2d – Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)

Required adjustments for Eko Transport Company’s overstated inventory, dividend error, and omitted share issue.

Eko Transport Company (ETC) Limited is preparing its financial statements for the year ended August 31, 2019. The draft statement of changes in equity is presented as follows:

 

Additional Information:

  1. On January 10, 2020, ETC Limited discovered that inventory was overstated by N105 million as at August 31, 2019, and by N90 million as at August 31, 2018.
  2. There was a transposition error in reporting dividend payments in the statement of changes in equity. The correct figure as at August 31, 2019, was N105 million.
  3. The company income tax rate is 30% in each year.
  4. On August 31, 2019, additional shares of 50,000,000 were issued at N1.25 per share. The par value of ETC Limited shares is N1.00 per share. This was inadvertently omitted in the record.

You are required to prepare:
i. Revised Comparative Income Statements after necessary adjustments for the years ended August 31, 2018, and 2019. (3 Marks)
ii. Adjusted Statement of Changes in Equity as at August 31, 2019. (5 Marks)
iii. The journal entries to correct the errors in (2) and (4) above. (2 Marks)

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  • 1 Marks

FA – Nov 2011 – L1 – SA – Q16 – Trial Balance

This question identifies which type of error affects the trial balance.

Which of the following errors would affect a Trial Balance?
A. Error of commission
B. Error of original entry
C. Casting error
D. Error of omission
E. Error of principle

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  • 20 Marks

FA – Nov 2021 – L1 – SB – Q1 – Bank Reconciliation

The question asks for the preparation of an adjusted cash book and a bank reconciliation statement and requires an explanation of the need for regular reconciliation.

On April 6, 2020, Alhaji Mogaji received his bank statement for the month ended March 31, 2020. The bank statement showed a balance of N41,740,000 (overdraft) as at March 31, while the cash book showed a balance of N52,599,000 (credit) as at that date. On examination of the cash book and the bank statement the following were discovered:

  1. Bank charges of N201,000 had not been recorded in the cash book.
  2. Alhaji Mogaji exceeded his overdraft limit during the month of March. The bank had therefore charged him a default penalty of N250,000. This was not reflected in the cash book.
  3. A sum of N1,250,000 had been credited to Alhaji Mogaji’s bank account in error.
  4. A cheque for N1,230,000 had been returned by the bank as dishonoured. In effect, the bank charged Alhaji Mogaji N15,000, which was not reflected in the cash book.
  5. Cash receipts of N3,740,000 were posted as cash payments of N4,730,000 in the cash book.
  6. On March 21, Alhaji Mogaji transferred cash of N650,000 to his personal bank account, but this was credited to the business bank account in error by the bank.
  7. Standing orders and direct debits of N1,115,000 had not been posted to the cash book.
  8. Customers had transferred N2,170,000 directly to the bank account. The credit alert was received, but no record had been made in the cash book.
  9. An amount of N5,120,000 lodged to the bank account on March 31, 2020, had not been credited by the bank.
  10. The following cheques drawn on the bank account had not been presented for payment as at March 31, 2020:
  • Cheque No: 4528, March 11, 2020, for N840,000
  • Cheque No: 4535, March 28, 2020, for N1,740,000
  • Cheque No: 4537, March 31, 2020, for N3,670,000

You are required to:
a. Prepare the adjusted cash book for the month of March 2020. (9 Marks)
b. Prepare a statement on March 31, 2020, reconciling the bank statement balance with the adjusted cash book balance. (7 Marks)
c. Explain TWO reasons for preparing a bank reconciliation statement on a regular basis. (4 Marks)

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  • 1 Marks

FA – May 2022 – L1 – SA – Q14 – Correction of Errors

Identify which scenario can be regarded as an error in bookkeeping.

Which of the following can be regarded as an error in bookkeeping?

A. Intentional correct posting in the ledger
B. Intentional failure to record transactions completely
C. A deliberate manipulation of records
D. Incorrect records and oversights that are not intended
E. Double entry posting in the ledger

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  • 1 Marks

FA – Nov 2022 – L1 – SA – Q5 – Bank Reconciliation

Identify the item that affects the cash book but is credited in the bank statement.

An item credited in the bank statement but yet to be recorded in the firm’s cash book is
A. Standing order
B. Direct transfer
C. Direct debit
D. Uncredited lodgements
E. Unpresented cheques

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  • 14 Marks

FA – Nov 2014 – L1 – SB – Q4b – Bank Reconciliation, Correction of Errors

Preparing cash book adjustments and reconciling the bank balance with the cash book.

On 30 June 2014, Maxwell’s cash book showed that he had an overdraft of N300,000 on his current account at the bank. The bank statement as at the end of June 2014 showed that Maxwell was in credit by N65,000.

On checking the cashbook with the bank statement, the following discrepancies were found:

i. Cheque drawn amounting to N500,000 had been entered in the cash book, but had not been presented.
ii. Cheque received amounting to N400,000 had been entered in the cash book, but had not been credited by the bank.
iii. On instructions from Maxwell, the bank had transferred interest of N60,000 from his savings account to his current account, recording the transfer on 5 July 2014. This amount had been posted into the cash book as at 30 June 2014.
iv. Bank charges of N35,000, shown in the bank statement, had not been entered in the cash book.
v. The payment side of the cash book had been under-cast by N10,000.
vi. Dividend received amounting to N200,000 had been paid directly to the bank and not entered in the cash book.
vii. A withdrawal of N50,000 from the savings account had been shown in the cash book as a drawing from the current account.
viii. A cheque for N25,000 issued to Jones over six months ago had been stale and was later replaced. It was entered again in the cash book, and no other entry was made. Both cheques were included in the total of unpresented cheques shown above.

Required:

i. Indicate the appropriate adjustments in the cash book. (8 Marks)
ii. Prepare a statement reconciling the amended balance with that shown in the bank statement. (6 Marks)
(Total 20 Marks)

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  • 5 Marks

FA – Nov 2023 – L1 – SB – Q3A – Correction of Errors

Explain types of errors and their impact on the trial balance.

i. State THREE types of errors that can be revealed by the trial balance.
(3 Marks)

ii. Explain the effect of each type of error on the trial balance and the financial statements.
(5 Marks)

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  • 1 Marks

AAA – Nov 2012 – L3 – AII – Q2 – Overview of Advanced Audit and Assurance

Defines an unintentional mistake in the accounting process resulting in material misstatement.

An unintentional mistake is ……………committed by anyone in the accounting process which results in material misstatement.

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  • 10 Marks

FR – Nov 2020 – L2 – Q2d – Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)

Required adjustments for Eko Transport Company’s overstated inventory, dividend error, and omitted share issue.

Eko Transport Company (ETC) Limited is preparing its financial statements for the year ended August 31, 2019. The draft statement of changes in equity is presented as follows:

 

Additional Information:

  1. On January 10, 2020, ETC Limited discovered that inventory was overstated by N105 million as at August 31, 2019, and by N90 million as at August 31, 2018.
  2. There was a transposition error in reporting dividend payments in the statement of changes in equity. The correct figure as at August 31, 2019, was N105 million.
  3. The company income tax rate is 30% in each year.
  4. On August 31, 2019, additional shares of 50,000,000 were issued at N1.25 per share. The par value of ETC Limited shares is N1.00 per share. This was inadvertently omitted in the record.

You are required to prepare:
i. Revised Comparative Income Statements after necessary adjustments for the years ended August 31, 2018, and 2019. (3 Marks)
ii. Adjusted Statement of Changes in Equity as at August 31, 2019. (5 Marks)
iii. The journal entries to correct the errors in (2) and (4) above. (2 Marks)

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  • 1 Marks

FA – Nov 2011 – L1 – SA – Q16 – Trial Balance

This question identifies which type of error affects the trial balance.

Which of the following errors would affect a Trial Balance?
A. Error of commission
B. Error of original entry
C. Casting error
D. Error of omission
E. Error of principle

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  • 20 Marks

FA – Nov 2021 – L1 – SB – Q1 – Bank Reconciliation

The question asks for the preparation of an adjusted cash book and a bank reconciliation statement and requires an explanation of the need for regular reconciliation.

On April 6, 2020, Alhaji Mogaji received his bank statement for the month ended March 31, 2020. The bank statement showed a balance of N41,740,000 (overdraft) as at March 31, while the cash book showed a balance of N52,599,000 (credit) as at that date. On examination of the cash book and the bank statement the following were discovered:

  1. Bank charges of N201,000 had not been recorded in the cash book.
  2. Alhaji Mogaji exceeded his overdraft limit during the month of March. The bank had therefore charged him a default penalty of N250,000. This was not reflected in the cash book.
  3. A sum of N1,250,000 had been credited to Alhaji Mogaji’s bank account in error.
  4. A cheque for N1,230,000 had been returned by the bank as dishonoured. In effect, the bank charged Alhaji Mogaji N15,000, which was not reflected in the cash book.
  5. Cash receipts of N3,740,000 were posted as cash payments of N4,730,000 in the cash book.
  6. On March 21, Alhaji Mogaji transferred cash of N650,000 to his personal bank account, but this was credited to the business bank account in error by the bank.
  7. Standing orders and direct debits of N1,115,000 had not been posted to the cash book.
  8. Customers had transferred N2,170,000 directly to the bank account. The credit alert was received, but no record had been made in the cash book.
  9. An amount of N5,120,000 lodged to the bank account on March 31, 2020, had not been credited by the bank.
  10. The following cheques drawn on the bank account had not been presented for payment as at March 31, 2020:
  • Cheque No: 4528, March 11, 2020, for N840,000
  • Cheque No: 4535, March 28, 2020, for N1,740,000
  • Cheque No: 4537, March 31, 2020, for N3,670,000

You are required to:
a. Prepare the adjusted cash book for the month of March 2020. (9 Marks)
b. Prepare a statement on March 31, 2020, reconciling the bank statement balance with the adjusted cash book balance. (7 Marks)
c. Explain TWO reasons for preparing a bank reconciliation statement on a regular basis. (4 Marks)

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  • 1 Marks

FA – May 2022 – L1 – SA – Q14 – Correction of Errors

Identify which scenario can be regarded as an error in bookkeeping.

Which of the following can be regarded as an error in bookkeeping?

A. Intentional correct posting in the ledger
B. Intentional failure to record transactions completely
C. A deliberate manipulation of records
D. Incorrect records and oversights that are not intended
E. Double entry posting in the ledger

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  • 1 Marks

FA – Nov 2022 – L1 – SA – Q5 – Bank Reconciliation

Identify the item that affects the cash book but is credited in the bank statement.

An item credited in the bank statement but yet to be recorded in the firm’s cash book is
A. Standing order
B. Direct transfer
C. Direct debit
D. Uncredited lodgements
E. Unpresented cheques

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  • 14 Marks

FA – Nov 2014 – L1 – SB – Q4b – Bank Reconciliation, Correction of Errors

Preparing cash book adjustments and reconciling the bank balance with the cash book.

On 30 June 2014, Maxwell’s cash book showed that he had an overdraft of N300,000 on his current account at the bank. The bank statement as at the end of June 2014 showed that Maxwell was in credit by N65,000.

On checking the cashbook with the bank statement, the following discrepancies were found:

i. Cheque drawn amounting to N500,000 had been entered in the cash book, but had not been presented.
ii. Cheque received amounting to N400,000 had been entered in the cash book, but had not been credited by the bank.
iii. On instructions from Maxwell, the bank had transferred interest of N60,000 from his savings account to his current account, recording the transfer on 5 July 2014. This amount had been posted into the cash book as at 30 June 2014.
iv. Bank charges of N35,000, shown in the bank statement, had not been entered in the cash book.
v. The payment side of the cash book had been under-cast by N10,000.
vi. Dividend received amounting to N200,000 had been paid directly to the bank and not entered in the cash book.
vii. A withdrawal of N50,000 from the savings account had been shown in the cash book as a drawing from the current account.
viii. A cheque for N25,000 issued to Jones over six months ago had been stale and was later replaced. It was entered again in the cash book, and no other entry was made. Both cheques were included in the total of unpresented cheques shown above.

Required:

i. Indicate the appropriate adjustments in the cash book. (8 Marks)
ii. Prepare a statement reconciling the amended balance with that shown in the bank statement. (6 Marks)
(Total 20 Marks)

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  • 5 Marks

FA – Nov 2023 – L1 – SB – Q3A – Correction of Errors

Explain types of errors and their impact on the trial balance.

i. State THREE types of errors that can be revealed by the trial balance.
(3 Marks)

ii. Explain the effect of each type of error on the trial balance and the financial statements.
(5 Marks)

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