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ACCA Applied Knowledge · Financial Accounting · Correction of errors

Which of the following errors would cause the trial balance totals to differ?

Recording the purchase as debit $800 and credit $80 makes the trial balance disagree by $720. The other errors either omit both sides, post to a wrong account, or use the same wrong amount on both sides, so debits still equal credits.

  1. APurchase of goods for $800 recorded as debit purchases $800 and credit payables $80Correct
  2. BCash received from a customer for $300 omitted completely from both the cash book and receivables ledger
  3. CRent paid of $250 debited to the insurance expense account and credited to bank
  4. DSale of $1,000 recorded as $100 in both the sales account and the receivables account

Explanation

Only option one has unequal sides: the debit is $800 but the credit is $80, so the trial balance differs by $720. Omission of both entries, a wrong expense account, and the same wrong amount on both sides all leave debits equal to credits.

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