Question

Two students are discussing the use of a trial balance. They wonder whether the following errors,...

Two students are discussing the use of a trial balance. They wonder whether the following errors, each considered separately, would prevent the trial balance from balancing.

(a) The bookkeeper debited Cash for $600 and credited Salaries and Wages Expense for $600 for payment of wages.
(b) Cash collected on account was debited to Cash for $900 and Service Revenue was credited for $90.

What would you tell them?

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Answer #1

Ans a. Here there is error of principle, The account to be debited is credited and account to be credited is debited but the amount is correct on both sides. Hence, debit and credit both for $600 will Balance the Trial Balance.

Ans b. Here there is clerical error and error of principle, instead of service revenue Accounts Receivable was to be credited but the amount credited in Service is $90 instead of $900, due to which Trial Balance will not balance.

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