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A Level Accounting (9706)•9706/13/M/J/23
Question 8 from 9706/13/M/J/23

Explanation

Errors Causing Trial Balance Imbalance Steps: - Identify errors affecting only one side of the trial balance, creating a 27,000discrepancy.−Error1:Credittosalesinsteadofcreditoroverstatescreditsby27,000 discrepancy. - Error 1: Credit to sales instead of creditor overstates credits by 27,000discrepancy.−Error1:Credittosalesinsteadofcreditoroverstatescreditsby27,000 (one-sided error). - Error 2: Omission of debit to purchases understates debits by 27,000(one−sidederror).−Error4:Credittopurchasesinsteadofdebitunderstatesdebitsby27,000 (one-sided error). - Error 4: Credit to purchases instead of debit understates debits by 27,000(one−sidederror).−Error4:Credittopurchasesinsteadofdebitunderstatesdebitsby27,000 (one-sided error); error 3 is a compensating transfer, balancing both sides. - Combine errors: 2 and 4 each cause 27,000debitshortage,butquestionasksforerrorsleadingto27,000 debit shortage, but question asks for errors leading to 27,000debitshortage,butquestionasksforerrorsleadingto27,000 difference total. Why D is correct: - Errors 2 and 4 each omit or reverse a 27,000debit,creatinganet27,000 debit, creating a net 27,000debit,creatinganet27,000 debit shortage per the trial balance rule that one-sided errors unbalance totals. Why the others are wrong: - A: Error 1 overstates credits (27,000),error2understatesdebits(27,000), error 2 understates debits (27,000),error2understatesdebits(27,000), netting 54,000difference.−B:Botherrors1and4affectcreditsordebitsunevenly,netting54,000 difference. - B: Both errors 1 and 4 affect credits or debits unevenly, netting 54,000difference.−B:Botherrors1and4affectcreditsordebitsunevenly,netting54,000 imbalance. - C: Error 2 understates debits ($27,000), but error 3 is self-correcting (cash to bank transfer balances both …

Topic: Reconciliation and verification

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