After preparing trial balance which is tallied at the end of year, the owner of Shikhar Furnishing Traders was fully satisfied that his books of accounts are perfect and errorless. Is he correct in his thinking?
Answers
Answer:
Mr. Manoj wrote to the Mr. Venkatesh on 6th June, offering to sell them some wool and requested
that the Mr. Venkatesh reply „in course of post‟. The letter which contained the offer was wrongly
addressed and therefore the Mr. Venkatesh did not receive it until 9th June. On receiving the letter
the Mr. Venkatesh posted a letter of acceptance the same day. However, due to the delay the Mr.
Manoj had assumed the Mr. Venkatesh was not interested in the wool and sold it to a third party on
8
th June. Advise Mr. Venkatesh.
Answer:
The investigation and analysis are necessary to ensure the accuracy of the financial statements.
Explanation:
From the above question,
They have given :
After preparing trial balance which is tallied at the end of year, the owner of Shikhar Furnishing Traders was fully satisfied that his books of accounts are perfect and errorless.
No, a balanced trial balance does not guarantee that the books of accounts are errorless. A trial balance only confirms that the total debit and credit amounts in the ledger are equal.
It does not guarantee that the books of accounts are free of errors or inconsistencies, such as transposition errors, incorrect posting, or omitted transactions. Further steps such as reviewing the completeness and accuracy of supporting documentation, reconciling bank statements, and conducting a substantive audit are necessary to ensure the accuracy of the financial statements.
However,
Other errors such as incorrect posting, incorrect calculations, misclassification, etc., may still exist in the books of accounts even if the trial balance is balanced. Further investigation and analysis are necessary to ensure the accuracy of the financial statements.
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