Question

27. Compensating errors are
(b) Errors committed in one transac
(a) Combination of more than one errors.
(c) Errors committed by applying incorrect accounting principles. (d) None of the above.
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Answer 1

CORRECT QUESTION :

❖ Compensating errors are

• (a) Combination of more than one errors.

• (b) Errors committed in one transaction

• (c) Errors committed by applying incorrect accounting principles.

• (d) None of the above.

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ANSWER :

❍ (a) Combination of more than one errors.

• ✎ Compensating errors are combination of more than one errors.

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EXPLANATION :

❒ Compensating Errors :-

• ➮ When two or more errors are committed in such a way that the net effect of these errors on the account is name such errors are called compensating errors. In other word, compensating errors at the errors which are neutralized by the combination of another error or errors in the accounting process.

• ➮ Compensating errors are not single errors but a combination of more than one error and hence these errors pose greater problems than other types of errors.