Rectification of Errors
1.Which of the following is NOT a type of error?
(a) Error of Omission
(b) Error of Commission
(c) Error of Principle
(d) Error of Judgment ✓
2.What is the purpose of a suspense account?
(a) To record transactions temporarily
(b) To hold the difference in a trial balance until errors are found ✓
(c) To record errors of principle
(d) To rectify errors of commission
3.If a purchase of goods for ₹500 is recorded as ₹5,000, what type of error is it?
(a) Error of Omission
(b) Error of Commission✓
(c) Error of Principle
(d) Compensating Error
4.Which of these errors does NOT affect the trial balance?
(a) A sale of ₹1,000 not recorded at all
(b) A purchase of ₹2,000 recorded as ₹200
(c) A sale of ₹500 recorded in the wrong customer's account✓
(d) A purchase of ₹1,500 posted to the wrong side of the account
5.What is the first step in rectifying an error?
(a) Pass a journal entry
(b) Identify the error✓
(c) Adjust the trial balance
(d) Close the suspense account
6.If a transaction is completely omitted from the books, it is an:
(a) Error of Omission✓
(b) Error of Commission
(c) Error of Principle
(d) Compensating Error
7.An error where a transaction is recorded in the wrong account but with the correct amount is a:
(a) Error of Omission
(b) Error of Commission✓
(c) Error of Principle
(d) Compensating Error
8.Which of the following is an example of an error of principle?
(a) A sale of goods recorded as a purchase
(b) Purchase of a machine treated as an expense✓
(c) A wrong amount posted to the correct account
(d) A transaction not recorded at all
9.Compensating errors are those that:
(a) Are intentionally committed
(b) Affect only one side of the trial balance
(c) Cancel out each other's effect✓
(d) Are easy to detect
10.Which account is used to rectify errors that affect the trial balance?
(a) Profit and Loss Account
(b) Suspense Account✓
(c) Balance Sheet
(d) Trading Account
Bills of Exchange
1.A bill of exchange is:
(a) A type of currency
(b) An unconditional order in writing✓
(c) A receipt for goods purchased
(d) A promise to pay
2.Who is the 'drawer' of a bill of exchange?
(a) The person who draws the bill✓
(b) The person who accepts the bill
(c) The person who pays the bill
(d) The bank
3.What is 'acceptance' of a bill of exchange?
(a) Signing the bill as the drawer
(b) Signing the bill as the drawee, agreeing to pay✓
(c) Endorsing the bill to a third party
(d) Presenting the bill for payment
4.A bill payable after a fixed period of time is called a:
(a) Demand bill
(b) Time bill✓
(c) Accommodation bill
(d) Documentary bill
5.What is 'discounting' a bill of exchange?
(a) Paying the bill on maturity
(b) Selling the bill to a bank before maturity✓
(c) Renewing the bill after maturity
(d) Endorsing the bill to a creditor
6.When a bill is dishonored, the:
(a) Drawee fails to pay✓
(b) Drawer fails to draw the bill correctly
(c) Bank refuses to discount the bill
(d) Endorsee refuses to accept the bill
7.What is 'noting' a bill of exchange?
(a) Recording the bill in the books
(b) Getting the dishonor of the bill officially noted✓
(c) Sending a notice of the bill's maturity
(d) Renewing the bill
8.A bill drawn and payable within the same country is a:
(a) Inland bill✓
(b) Foreign bill
(c) Accommodation bill
(d) Documentary bill
9.Which of the following is NOT a party to a bill of exchange?
(a) Drawer
(b) Drawee
(c) Consignee✓
(d) Endorsee
10.What is the primary purpose of a bill of exchang
e?
(a) To serve as a means of payment
(b) To facilitate credit transactions✓
(c) To act as a security for a loan
(d) All of the above