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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  • 8 Marks

FA – Nov 2019 – L1 – SB – Q1b – Trial Balance: Usefulness and Limitations

Identifies errors that affect and do not affect the trial balance.

b. The balancing of a trial balance does not necessarily mean that such trial balance is error-free.

Required:
Using a two-column tabular format, highlight FOUR errors that do not affect the trial balance and FOUR errors that affect the trial balance. (8 Marks)

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  • 1 Marks

FA – Nov 2019 – L1 – SA – Q13 – Trial Balance: Usefulness and Limitations

Identify the reason for the imbalance in the trial balance.

An Accounts officer extracted a trial balance for the year ended October 31, 2019, and discovered that the debit side exceeded the credit side by N30,000. Which of the following could explain the reason for the imbalance?

A. Sales of N30,000 was omitted from the sales journal
B. Returns inwards of N15,000 was posted to the debit side of the trial balance
C. Discounts received of N15,000 were posted to the credit side of the trial balance
D. The bank ledger account did not agree with the bank statement by a debit of N30,000
E. N30,000 spent on repairs of office equipment was debited to office equipment account

 

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  • 2 Marks

FA – May 2016 – L1 – SB – Q1b – Trial Balance: Usefulness and Limitations

Listing four errors that the trial balance does not reveal.

Mention FOUR errors that the trial balance will not reveal.

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  • 1 Marks

FA – May 2016 – L1 – SA – Q16 – Correction of Errors

Identifying the error committed when N120,000 wages were not recorded.

Olojuede limited failed to record N120,000 wages. The error committed is that of
A. Omission
B. Commission
C. Principle
D. Compensation
E. Original entry

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  • 1 Marks

FA – Mar/July 2020 – L1 – SA – Q6 – Trial Balance: Usefulness and Limitations

Identifying errors that cause trial balance discrepancies

Which of the following errors will cause the trial balance totals to be unequal?
A. Errors of transposition
B. Errors of omission
C. Errors of principle
D. Compensating error
E. Error of commission

 

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  • 20 Marks

QT – Nov 2018 – L1 – Q7 – Probability

Calculate expected returns for investments, determine optimal strategy, and analyze student error distribution.

Royal Driving School is considering investing in a profitable project. The school is given the following investment alternatives and percentage rates of return.

Over the past 300 days, market conditions have been moderate for 150 days and good for 60 days.

Required:
i) Calculate the expected return for each type of investment. (4 marks)
ii) Determine the optimum investment strategy for Royal Driving School. (3 marks)

b) The number of errors made by 294 students of Royal Driving School in their first attempt at a driving test is grouped in the following frequency distribution:

Number of Errors Number of Students
7 – 13 3
14 – 20 12
21 – 27 23
28 – 34 44
35 – 41 54
42 – 48 56
49 – 55 43
56 – 62 24
63 – 69 23
70 – 76 12

Required:
i) Compute an estimate of the mean and mode for the distribution. (3 marks)
ii) Construct an ogive for the distribution. (4 marks)
iii) Using the ogive in (ii) above, estimate the median for the distribution. (3 marks)
iv) Use the ogive in (ii) above to estimate the percentage of errors within one standard deviation of the mean. (3 marks)

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  • 6 Marks

PSAF – Nov 2019 – L2 – Q2b -General purpose financial reporting framework

Discuss the guiding principles for formulating accounting policies, conditions for changes, and treatment of changes under IPSAS 3.

b) With reference to IPSAS 3: Accounting Policies, Changes in Estimates and Errors:

i) Explain the guiding principles for formulating accounting policy. (2 marks)

ii) The conditions that mandate a change in accounting policy. (2 marks)

iii) The treatment of changes in accounting policy required by IPSAS 3. (2 marks)

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  • 6 Marks

FA – Mar 2024 – L1 – Q3b – Bank reconciliations

Prepare an adjusted cash book and a bank reconciliation statement following identified errors.

The accountant of Abeiku Ltd has prepared a trial balance but found that the total of debit balances is GH¢691,680 and the total of credit balances is GH¢689,720.

On investigation, the following errors were discovered in the book-keeping:

  1. Total purchases were recorded at GH¢80 below their correct value, although the total value of trade payables was correctly recorded.
  2. Total telephone expenses were recorded at GH¢800 above their correct amount, although the total value of the amounts payable was correctly recorded.
  3. Purchase returns of GH¢440 were recorded as a debit entry in the sales returns account, but the correct entry had been made in the trade payables control account.
  4. Equipment costing GH¢1,600 had been recorded as a debit entry in the repairs and maintenance account.
  5. Rental expenses of GH¢4,392 were entered incorrectly as GH¢4,932 in the expense account but were entered correctly in the bank account in the ledger.
  6. Bank charges of GH¢160 have been omitted entirely from the ledger.

Required:

i) Prepare journal entries for the correction of the errors. (6 marks)

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  • 14 Marks

FA – Mar 2024 – L1 – Q3a – Bank reconciliations

Prepare a bank reconciliation statement and an adjusted cash book for Malik & Company.

i) Mr. Malik is a sole trader and carries on business under the name “Malik & Company”. The balance on his cash book at 31 December 2023 did not agree with the balance as per the bank statement, which shows a credit balance of GH¢183,750.

An examination of the cash book and bank statement disclosed the following:

  1. A deposit of GH¢24,600 made on 29 December 2023 and recorded in the cashbook had been credited by the bank on 1 January 2024.
  2. Bank charges of GH¢850 have not been entered in the cash book.
  3. A debit of GH¢2,100 appeared on the bank statement for an unpaid cheque which had been returned marked “out of date”. The cheque was re-dated by his customer and paid into the bank again on 3 January 2024. The earlier transaction was recorded in the cashbook.
  4. A standing order for payment of an annual subscription amounting to GH¢500 has not been entered in the cash book.
  5. On 26 December 2023, Mr. Malik had given the cashier a cheque for GH¢5,000 to pay into his personal account at the bank. The cashier deposited it into the business account by mistake.
  6. On 27 December 2023, a customer had made an online transfer of GH¢24,950 in payment against goods supplied. The advice was received and recorded in the cash book on 2 January 2024.
  7. On 30 September 2023, Mr. Malik entered into a hire purchase agreement and issued a standing order to the bank to pay a sum of GH¢1,300 on day 10 of each month, commencing from October 2023. No entries have been made in the cash book for these payments.
  8. A cheque for GH¢18,200 received from Mr. Adoboe had been entered twice in the cash book.

Required:

i) Prepare the adjusted cash book for Malik & Company in a format which clearly indicates whether each entry is a debit or credit. (7 marks)

ii) Prepare a reconciliation of the bank statement balance to the adjusted cash book balance. (7 marks)

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