12:12 wall al F 288 @@n
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Qaswar's School of
Accountancy
|.Com part 1 short notes
Questions and Answers
Chapter No.1
Journal, Ledger and Trial
balance
What is accounting?
“Accounting is act of Recording, classifying, Summarizing
and interpreting the monetary transactions.
What is bookkeeping?
“Book keeping is the act of recording monetary
transactions in the books of account.”
Define business?
Any legal activity undertaken for the purpose of earning
nrafit ic nallad hucinace
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Define business?
Any legal activity undertaken for the purpose of earning
profit is called business
e.g General Store, Book shop.
Define proprietor
“The owner of business who actually invests money in
the business.”
e.g Mr. Ahmad started a business, Mr. Ahmad is
Proprietor of the business.
Define capital?
“Investment by the owner of business to start a
business”
e.g Mr. Ahmad started a business with Rs.100000, Rs.
100000 is his Capital.
What is drawing?
“The cash or goods taken away by the proprietor from
the business for his personal use are called drawings”
What is a transaction?
“Any dealing between two persons or things is called
transaction”
Mr. Ahmad sales goods to Mr. Ishaq at certain price is
called transaction between Mr.Ahmad and Mr. Ishaq
Define double entry system?
A system in which we consider both aspects (Dr and Cr)
of transactions.
What is trade discount?
“A Trade discount is allowed by the manufacturer or the
wholesaler on the list price/Retail price of goods or
services from one party to other party.”
What is cash discount?
Any Deduction which is allowed by the seller to the
purchaser at the time of Payment is called cash
Discount.”12:12 wal FRB veep we eee pee ea
What is cash discount?
Any Deduction which is allowed by the seller to the
purchaser at the time of Payment is called cash
Discount.”
What is sale?
“When goods are sold to customer at specific price it
is called a sale”
e.g when books sold by book shop to students
What is sale return/return inward?
“When goods are returned by customer to business,
it is recorded in sales return book”
What are purchases?
“Goods purchased by business for selling purpose are
called purchases”
e.g books purchased by book shop for sales.
Types of Purchases
Cash Purchases
“Goods purchased by business for selling purpose on
credit are called Cash Purchases”
Credit Purchases
“Goods purchased by business for selling purpose on
Cash are called Credit Purchases”
What is purchases return/return outward?
“Goods returned by Business to supplier due to
any defects are called purchase returns.”
What is account?
“A summarized record of business transactions relating
to a person or a thing.”
What are assets?
“Assets are Economic resources of business.” Or” AN
asset is a resource controlled by the entity
as a result of past events and from which12:12 wall atl 258 @@n
What are assets?
“Assets are Economic resources of business.” Or” An
asset is a resource controlled by the entity
as a result of past events and from which
economic benefits are expected to flow to
the entity.”
(Cash. Account receivable and debtors)
Define liabilities?
“Any kind of debts of business is liabilities” or “A
liability is a present obligation of the entity
arising from past events, the settlement of
which is expected to result in an outflow
from the entity of resources embodying
economic benefits.”
e.g (Account Payable, creditors)
Accounting equation?
“Assets = Liabilities + Capital (Owner's Equity)”
Define debtors or Account Receivables?
“A Person to whom goods are sold on credit, it is
consider as assets of the business”
e.g Mr.A Sold Goods to B for Rs. 10000, B is Debtors
from A Point of View.
Define creditors or Account Payable?
“A Person who sold the goods to business on credit and
to whom Money is payable (Due), it is considered as
Liability of the business”
e.g Mr.A Sold Goods to B for Rs. 10000, A is Creditors
from B Point of View.
What is commission?
“It is a form of remuneration for services rendered by
one person to another”
What is difference between double entry system and12:12 atl atl & Ras @a@
What is commission?
“It is a form of remuneration for services rendered by
one person to another”
What is difference between double entry system and
single entry system?
“A system in which we follow two folded aspects (debit
and credit) of entry is called double entry system one is
debit (Dr) and other is credit (Cr)”
“A system in which we follow only one aspect (debit or
credit) is called single entry system. It is only partial
record of small business”
What are dual aspect concepts?
“Dual aspect concepts may be stated as for every
debit there is a credit, and for every credit there is a
debit.”
How many kinds of account?
The four types of account
Personal account
Impersonal account
Real account or property account
Nominal account
What are personal accounts?
“Accounts relating to person or firms are called personal
accounts.”
e.g Like ahmed account, bank alfalah.
What are real accounts?
“All those accounts which keep record of properties or
things owned by a trader are called real accounts.”
e.g building account, furniture account
What are nominal accounts?
Nominal accounts are for those that record income,
expenses, gains and losses “
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What are real accounts?
“All those accounts which keep record of properties or
things owned by a trader are called real accounts.”
e.g building account, furniture account
What are nominal accounts?
Nominal accounts are for those that record income,
expenses, gains and losses “
e.g such as Discount account, Salaries, Rent, Repair
account.
What is journal/Book of original entry?
“The book of accounts in which business transactions
are originally recorded in chronological order is called
journal.”
Define narration?
“A short explanation of each transaction in journal in
written form at the end of each entry. “
What is journalizing?
“The act of recording transaction in journal is called
journalizing.”
What is simple entry?
“The entry which involves only one debit and only one
credit is called simple entry.”
What in compound entry?
“The entry in which more than one account is debited or
credited is known as compound entry.”
What is ledger?
“A book in which all the transactions of a business
concern are finally recorded in the concerned accounts
in summarized and classified form is called ledger.”
Explain the term balancing?
“The process of equalizing the two side of account is
known as balancing.”12:12 atl atl & 258 @a@
Explain the term balancing?
“The process of equalizing the two side of account is
known as balancing.”
Define zero balance?
“If the two sides of an account are equal the account will
show zero balance.”
Define Debit balance?
“Debit balance meant where total of debit side
exceeds than credit side is written on credit side
of account.
Define Credit balance?
“Credit balance meant where total of credit side
exceeds than credit side is written on debit side
of account”
What is trial balance?
“An accounting schedule that lists the ledger account
balance at a point in time and total of debit balances is
equal to the total of credit balance.”
Define the term merchandise?
“Merchandise are the Goods which are purchased by
business for selling.”
e.g Books purchased by Shopkeeper are the
Merchandise for the business.
What is inventory?
“Goods on hand those remaining unsold at the end of the
year is also called stock.”
e.g Book Remain unsold at the end of the year called
stock or ending inventory.
Define bank?
“A bank is a financial institution which deals with
deposits and advances and other related services. It
receives money from those who want to save in the form
26 bo a a a te12:12 wall al & 292 @@n
Define bank?
“A bank is a financial institution which deals with
deposits and advances and other related services. It
receives money from those who want to save in the form
of deposits and it lends money to those who need it.”
.What is cheque?
“A cheque is unconditional order in writing drawn by
customer on his bank, requesting to pay on demand
certain sum of money.”
How many kinds of cheques?
Bearer cheques is one on which “bearer” is written after
the name of payee. It is payable to bearer.
Order cheques is one on which “order “ is written
after the name of payee. It is payable to person whose
name is written before order.
Crossed cheques when two parallel line are drawn on
the side of cheque is payable only through a collecting
banker and not directly at the counter of the bank.
What is bank draft?
“A bank draft is mean of transferring money from one
place to another, is a written order in the form of a check
instructing the payment of money to the individual
named on the bank draft.”
How many functions of bank.
Primary function is to borrow and lend money.
General function is to issue important documents, and
keep valuable things in safe custody.
Agency function is bank collect and pay cheques and
realizes interest and dividend on customer behalf.
How may kinds of accounts?
Current accounts in this case the customer can deposit
or withdraw money any time within banking hours. Bank
does not nav anv interest or Profit/I oss1212 NR ea
How may kinds of accounts?
Current accounts in this case the customer can deposit
or withdraw money any time within banking hours. Bank
does not pay any interest or Profit/Loss.
Saving account customer deposits its saving into the
bank for specific period,Bank will share profit and loss
with customer.
Fixed Deposit account in which money is deposit for
fixed time period, Banks Pay very high interest rates.
Pay in slip a printed form which is filled in when money is
being deposited in a bank.
Cheque book A booklet of cheques which
enable holder to draw money from
his/her account deposits.
Bank pass book issued by a bank
to record deposits, withdrawals and balance in Account
holder account.
Bank Overdraft
“Any Excess amount withdrawn from bank by the
account holder is called bank overdraft”
Accounting Cycle
1. Transaction
2. Journal
3. Ledger
4. Trial Balance
5. Final Account (Trading and Profit and
Loss, Balance Sheet)
Chapter no 212:13 wall atl 058 @@
Accounting Cycle
1. Transaction
2. Journal
3. Ledger
4. Trial Balance
5. Final Account (Trading and Profit and
Loss, Balance Sheet)
Chapter no 2
Bill of
exchange
Define bill of exchange?
“A bill of exchange is an instrument in writing containing
an unconditional order by one person (seller) to another
person (purchaser) signed by the both parties having
fixed amount payable after fixed future Time.”
How many parties involves in bill of exchange?
There are three parties involve in bill of exchange
Drawer
Drawee
Payee
Define drawer, drawee and payee?
Drawer: the person who writes/draw the bill of
exchange. He is the seller/Debtor.
Drawee: the person to whom the bill is drawn12:13 wall al Ra8 @@n
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Define bill of exchange?
“A bill of exchange is an instrument in writing containing
an unconditional order by one person (seller) to another
person (purchaser) signed by the both parties having
fixed amount payable after fixed future Time.”
How many parties involves in bill of exchange?
There are three parties involve in bill of exchange
Drawer
Drawee
Payee
Define drawer, drawee and payee?
Drawer: the person who writes/draw the bill of
exchange. He is the seller/Debtor.
Drawee: the person to whom the bill is drawn
Payee: the person who receives the
amount of bill is called payee. He may be drawer,
bank or endorsee.
Difference between inland bill and foreign bill
Inland bill are drawn in a country upon person
same country.
Foreign bill is drawn in a drawn in one country
and payable in another country.
Define promissory notes?
An instrument in writing containing an unconditional
promise by the maker (purchaser) to pay a certain sum
of money only to other person (seller) after fixed future
time neriad
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ana payapie If anotunier Courtry.
Define promissory notes?
An instrument in writing containing an unconditional
promise by the maker (purchaser) to pay a certain sum
of money only to other person (seller) after fixed future
time period.
How many parties involves in promissory notes?
They are two parties to a promissory note.
The maker (purchaser)
The payee (seller)
Tenor
Tenor is period of time after which a bill becomes
payable, also called duration of bill.
How many kind of acceptance?
There are two types of acceptance
General acceptance when accept the bill without
any condition.
Qualified acceptance when accept is accept with
condition/qualification (time, place).
Define bill receivable and bill payable?
When a bill is written then a bill from the view of drawer
is bill receivable
When a bill is written then a bill form the view of drawee
is called bill payable
Define grace days
It is customary to allow three days of grace to the
drawee to pay the amount in the case of a term bill.
Holder of the Bill
Holder of a bill means that Drawer, Endorsee and bank
whole is entitled to receive the payment on due date.
Define discounting a bill
If the holder of a bill is in need of money before the due
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Define discounting a bill
If the holder of a bill is in need of money before the due
date of bill he may sell it to the bank. The bank will give
cash after deduction of some charges.
e.g A draw the bill on B, A is drawer and B is drawee.
When A Discount the Bill form Bank is Called discounting
of Bill.
Define the endorsement of a bill
Endorsement of the bill means when drawer transfer the
bill to his creditor for settlement of debts.
A draw the bill on B, A is drawer and B is drawee. When A
endorsee Bill to C. C is Endorsee.
When a bill become dishonored
When Drawee fail/refuse to make the payment on the
due date is called dishonour of bill
e.g A draw the bill on B, A is drawer and B is drawee.
When B Fail to Make the Payment is called Dishonoured
of Bill.
Notary Public
Notary Public is an officer who maintains record of then
Dishonour Bills.
Define noting charges
In case of bill dishonored the notary pubic will charge a
small fee from the holder of the bill This fee is known as
noting charges.
What is meant by retiring of a bill
Retiring a bill means making payment before of maturity
of the bill
e.g A draw the bill on B, A is drawer and B is drawee.
When B make the payment before date.
Define Trade Bill
Trade bill is drawn and accept on Credit purchase and12:13 wall al & 238 @a@
What is meant by retiring of a bill
Retiring a bill means making payment before of maturity
of the bill
e.g A draw the bill on B, A is drawer and B is drawee.
When B make the payment before date.
Define Trade Bill
Trade bill is drawn and accept on Credit purchase and
sale of goods.
Define accommodation bill.
accommodation bill drawn to help or to accommodate
someone for certain period.
Insolvency
Insolvency mean the on the due date of the bill, the
person is unable to pay the whole the bill.
Renewal of bill
Drawee request the drawer to issue new bill with
condition to cancel the old bill before due date by paying
some interest.
Chapter # 3
Cash book and bank
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Chapter # 3
Cash book and bank
reconciliation statement
Define Subsidiary book?
some transactions which are of repetitive nature which
need to record separately, So journal is subdivided into
different journal known as subsidiary books
Important subsidiary books
Cash book: it is used to record all cash receipts and
payments Receipts are recorded on Debit side and
Payment on Credit side.
Purchases book: It is used to record all credit purchases
Sales book: It is used to record all credit sales
Purchases return book: It is used to record all goods
return by us to supplier
Sales return book: It is used to record all goods return to
us by our supplier.
Bill receivable book: It is used to record all accepted bills
received us
Bill payable book: It is used to record all bill accepted by
us to our creditors
Journal proper: It is used to record all those transitions
for which there is no separate book
Define vouchers?
Answer: Vouchers are documents containing evidences
of payments and receipts.
How many kinds of cash book?
Answer:
There are three types of cash books
: Single column cash book: which is used to12:13 wall ail F 208 @@n
UL Paylieis anu 1eLEIpLD.
How many kinds of cash book?
Answer:
There are three types of cash books
Single column cash book: which is used to
record cash receipts and payments.
Double column cash book: which has two
column on both sides of cash. One is to record cash and
other is to record banking transaction.
Triple column cash book which has three
columns on both sides of cash. One is to record cash
Second is to record banking transaction and thirds is for
discount
What is contra entry?
A transaction in which cash account and bank account
are involved is recorded on both sides of cash book.
What is a petty cash book?
Answer: The book in which small payments which are
not convenient to record in the main cash book the
record is called petty cash book.
Imprest system
Under this system the total petty expenses for particular
period are estimated and that amount is advance by the
cashier.
What is bank reconciliation statement?
Bank reconciliation statements a statement which
contains a complete and satisfactory explanation of
differences in balance as per the cash book and bank
statement
What is pass book?
Issued by a bank to record deposits, withdrawals and
balance in Account holder account
Define bank statement?
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Define bank statement?
A summary of customer’s account is sent by bank
periodically or on the request to know about
transactions with bank
Unpresented Cheque
Cheques which have been issued for payment but may
not be presented to bank by the creditor.
Uncredited cheque
Cheques which have been received from customer and
deposited into bank but may not have been credited by
bank
Chapter # 4
Final Accounts
What are final accounts?
Final account Consist of Trading and Profit and Loss
Account which finally show the profit and loss for a
particular period and Balance Sheet which show financial
position for a particular date.
What is profit and loss account or income statement?
A statement which shows the financial position of a
business for a particular period
What is balance sheet?
A statement which shows the financial position of a
business on a particular date
Trading Profit and Loss Account
Trading Account
Profit and Loss Account
What do you understand by direct expenses?
Expenses connected with purchases of goods or to bring
the goods in saleable condition are called direct12:13 wall ol F 208 @@n
Chapter # 4
Final Accounts
What are final accounts?
Final account Consist of Trading and Profit and Loss
Account which finally show the profit and loss for a
particular period and Balance Sheet which show financial
position for a particular date.
What is profit and loss account or income statement?
A statement which shows the financial position of a
business for a particular period
What is balance sheet?
A statement which shows the financial position of a
business on a particular date
Trading Profit and Loss Account
Trading Account
Profit and Loss Account
What do you understand by direct expenses?
Expenses connected with purchases of goods or to bring
the goods in saleable condition are called direct
expenses e.g Wages, carriage inward.
What do you understand by indirect expenses?
All these expenses which have no concern with
purchases of goods or to bring the good in saleable
condition are known as indirect expenses salaries,
carriage outward.
Define gross profit/Gross Loss, Net Profit and Net
Loss?
¢ Gross Profit means Excess of Sales over
cost of goods sold.
e Gross Loss Means Excess of Cost of Goods
Sold over Sales
¢ Net Profit Excess of gross profit over all12:13 wall atl ead @a@
carriage outward.
Define gross profit/Gross Loss, Net Profit and Net
Loss?
¢ Gross Profit means Excess of Sales over
cost of goods sold.
e Gross Loss Means Excess of Cost of Goods
Sold over Sales
e Net Profit Excess of gross profit over all
indirect expenses
e Net Loss Excess of Indirect expenses over
gross profit.
Define the closing entries?
The journal entries made for the purpose of closing the
temporary account called closing entries.
What are adjusting entries?
The entry at the end of the period to record internal
transactions are called adjusting entries.
What are assets?
All Economic resources of business are called assets of
business e.g. Building, Land, Debtors
Define liabilities?
Any kind of debts of business are liabilities e.g Accounts
Payable, Creditor, bank overdraft
Carriage inward
Carriage means conveyance charges incurred to bring
the good in the shop by road.
Dock Charges
These are the charges paid when ship left the port.
Freight inward
Conveyance Charges incurred to bring the good in the
shop by sea, Railway, Airplane.
Custom duty
A tax levied imports of good from one country to other12:14 wall al & 298 @@n
Freight inward
Conveyance Charges incurred to bring the good in the
shop by sea, Railway, Airplane.
Custom duty
A tax levied imports of good from one country to other
country.
Excise duty
It is a tax imposed by government of production of
goods.
Octori duty
It is a tax imposed on bringing goods to certain town or
cities.
Store consumed
This includes the items like lubrication oil, grease and
cotton required for running of business.
Motive power
Any source of energy used to produce motion in
machinery e.g. cock gas, water electricity energy
Royalty
Royalty is an amount paid to a person for exploiting
rights possessed by him.
Manufacturing expenses
This includes factory rent, factory insurance and factory
repairs.
What is marshalling?
The term marshalling means the order in which assets
and liabilities are stated on the balance sheet.
1. The order of liquidity
2. The order of performance
3. Mixed order of arrangement
Define the term debt?
When a customer becomes business debtor the amount
dita fram him ic eallad Nahte12:14 wall atl FZ 28 @@n
PHS UlUSE UL por ruriianus
3. Mixed order of arrangement
Define the term debt?
When a customer becomes business debtor the amount
due from him is called Debts
What is the bad debt?
The debts which cannot recover from the debtor are
called dad debts.
What are doubtful debts?
The debts the recover or realization of which is doubtful
or uncertain are known as doubtful debt.
Wasting Assets
Wasting assets are that whole value gradually reduces
with usage. Like, mine
Contingent Liabilities
Liabilities that may or may not be incurred by an entity
depending on the outcome of a future event such as a
court case
What Depreciation
Gradually decrease in the value of fixed assets is called
depreciation.
What is inventory?
Goods or merchandise on hand that is a goods remaining
unsold is also called stock.
Define outstanding expenses/ Accured Expenses
/Expenses Payable/Amount Due/Not Paid/Unpaid
The expenses incurred but have not been actually paid
till the end of current accounting year
Define outstanding income/Accured
Income/Income Receivable/ Amount Due/Not
received/Un received
Income earned but has not received till the end of
current accounting year
Neafine nranaid avnanea/ Daid in Aduanea/ Daid IInta12:14 wall all & B78 @@n
Define outstanding income/Accured
Income/Income Receivable/ Amount Due/Not
received/Un received
Income earned but has not received till the end of
current accounting year
Define prepaid expense/ Paid in Advance/ Paid Upto
Expenses paid in advance before they have fallen due.
Define income received in advance/unearned income/
received in advance
Income received in advance but not earned.
Chapter#5 .
Capital
and revenue
Define capital Transactions?
Transactions having long term effect are known as
capital transactions. Like purchase of Building
What are revenue transactions?
Transactions having short term effect are known as
revenue transactions. Like payment of Salaries
What do you mean by capital expenditures?
Expenditures incurred on acquiring fixed assets and
having Long term effect are known as capital
Expenditure. Like expenditure on purchase of Building,
Land and Furniture
Describe the revenues expenditure
All the expenditures which are incurred in the day to day
conduct and administration of a business and have short
term effects Like, purchases of stationery, payment of
salaries
Give any three examples of capital expenditures
Addition or extension of assets
Wages paid for the construction of building
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Chapter#5 .
Capital
and revenue
Define capital Transactions?
Transactions having long term effect are known as
capital transactions. Like purchase of Building
What are revenue transactions?
Transactions having short term effect are known as
revenue transactions. Like payment of Salaries
What do you mean by capital expenditures?
Expenditures incurred on acquiring fixed assets and
having Long term effect are known as capital
Expenditure. Like expenditure on purchase of Building,
Land and Furniture
Describe the revenues expenditure
All the expenditures which are incurred in the day to day
conduct and administration of a business and have short
term effects Like, purchases of stationery, payment of
salaries
Give any three examples of capital expenditures
Addition or extension of assets
Wages paid for the construction of building
Premium given for lease
Give the three examples of revenue expenditures
Wages paid to factory workers
Bad debt
Stationery
Describe the deferred revenue expenditures?
Revenue expenditure benefits of which is likely to more
than one year but it is non recurring by nature are called
deferred revenue expenditure
Give examples of deferred revenue expenditures?12:14 wall al F 238 @@
Give examples of deferred revenue expenditures?
Preliminary expenses
Heavy expenditures on advertisement for
making the new product.
Define capitalized expenditures?
Some revenue expenditure are connected with fixed
assets and are full added to cost of that assets whatever
is the amount. Like repairs of newly purchased
machinery
What are capital receipts?
Receipts which are non recurring by nature, received
from Sale of fixed assets are known as capital Receipts.
Like Receipts from sale of of Building, Land and Furniture
What are revenue receipts?
Receipts which are recurring by nature receive from the
day to day conduct and administration of a business and
have short term effects Like inertest received, Discount
Received
What is capital payment?
Payments which are non recurring by nature, incurred on
acquiring fixed assets and having Long term effect are
known as capital Payment. Like Payment for purchases
of Building, Land and Furniture
What is revenue payment?
Payments which are recurring by nature which are
incurred in the day to day conduct and administration of
a business and have short term effects
What do you mean by capital profit?
Capital profit is a profit which is earned on the sale of a
fixed asset for example a machinery worth of Rs. 10000
is sold for Rs. 15000. the profit is 5000/- is capital profit.
What do you mean by Revenue profit?12:14 wall atl F 238 @@
What do you mean by Revenue profit?
Revenue profit is a profit which is earned during the day
to day course of business is called revenue profit is a
regular Profit.
What is capital loss?
The loss suffered by a business on the sale of a fixed
asset or it incurred or raising capital or a joint stock
company. for example a machinery worth of Rs. 10000 is
sold for Rs. 8000. the Loss is 2000/- is capital Loss.
What is revenue loss?
Revenue Loss is a Loss which is earned during the day to
day course of business is called revenue loss.
Chapter # 6
Rectification of Errors
How many kinds of errors?
There are two kinds of errors
1. Book keeping error (in books of original
documents that are journal and ledger).
2. Trial balance error (errors which are
made in preparation of trial balance
How many kinds of book keeping error?
1. Error of omission: Where Transaction is
completely omitted from the accounting
records.
2. Error of commission: An error of
commission accrues when a transaction is partly
or wholly incorrectly in the books of accounts
Wrong amount posting to ledger
Wrong side posting to ledger
Making wrong entry in book of original entry
2 i ttt ae it a12:14 wall atl 2S @@n
Chapter # 6
Rectification of Errors
How many kinds of errors?
There are two kinds of errors
1. Book keeping error (in books of original
documents that are journal and ledger).
2. Trial balance error (errors which are
made in preparation of trial balance
How many kinds of book keeping error?
1. Error of omission: Where Transaction is
completely omitted from the accounting
records.
2. Error of commission: An error of
commission accrues when a transaction is partly
or wholly incorrectly in the books of accounts
Wrong amount posting to ledger
Wrong side posting to ledger
Making wrong entry in book of original entry
3. Error of principle: Mistakes arises out of
ignorance of fundamental principles of
accountancy e.g (wrong allocation of
depreciation, inadequate provision of dad debts,
and wrong allocation of revenue and capital and
revenue expenditure)
4. Compensating error: Compensating error
which are cancelled by an other error of same
amount in opposite direction
What is trial balance error?
Errors which are made in preparation of the trail balance
are called trial balance. Like
Omission of balance form the trial balance12:14 wall al & 298 @@n
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accountancy e.g (wrong allocation of
depreciation, inadequate provision of dad debts,
and wrong allocation of revenue and capital and
revenue expenditure)
4. Compensating error: Compensating error
which are cancelled by an other error of same
amount in opposite direction
What is trial balance error?
Errors which are made in preparation of the trail balance
are called trial balance. Like
Omission of balance form the trial balance
Wrong transfer of balance (amount)
Wrong side transfer of amount
Wrong additions of trial balance
What is suspense account?
Suspense account is an account in which we entered
transaction which cannot be placed to their proper
account for want sufficient information.
What is error of posting?
These errors are committed when a journal entry is
posited in to ledger.
What is error of casting?
It is error of posting where as the error occur due to
short casting or excess casting of an accounts
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