Day: April 11, 2024

Alex Ltd’s trial balance failed to agree, the totals being:

• Debit  £815,602
• Credit  £808,420

Which of the following errors could fully account for the difference?

Select ONE answer:

1. The omission from the trial balance of the prepayments asset account £7,182
2. Discounts allowed of £3,591 debited to the discounts received account, in error
3. No entries made in the records for cash purchases totalling £7,182
4. Bank overdraft of £3,591 was included in the trial balance as a debit

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – Bank overdraft of £3,591 was included in the trial balance as a debit. The difference results in a suspense account balance of £7,182 CR. Omitting a debit balance (prepayments) would make the credit total bigger than the debit total (1). In (2) the DR has been posted, just to the wrong account. Therefore, there will be no impact on the trial balance totals. For (3) as neither entry has been posted the trial balance totals will still balance.

This work is licensed under a Creative Commons Attribution 4.0 International License.