Why is it said that the trial balance is not a conclusive proof of the accuracy of the account books? explain with an example?
varshini130298:
Because errors such as errors if omission,errors of commission,errors of principal,errors of misposting,compensating errors cannot be detected by the trial balance.Even if the trial balance is tallied these errors might be crept in.
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Answered by
27
error of omission, error of commission, error of principal,error of misposting,compensating errors are not disclosed by tallied trial balance.Hence trial balance is not conclusive proof of accuracy of books of accounts.
example:building purchased for 300000 wrongly passed through purchase account is not disclosed in trial balance hence trial balance is not conclusive proof of accuracy of books of accounts.
example:building purchased for 300000 wrongly passed through purchase account is not disclosed in trial balance hence trial balance is not conclusive proof of accuracy of books of accounts.
Answered by
35
,
No, Trial Balance is not a complete proof of arithmetical accuracy of account. A Trial Balance in which the credit and debit accounts match does not prove that, all transactions have been recorded in the proper accounts. For example, the wages paid for the installation of machinery had been erroneously recorded by debiting the wages account in the place of machinery account, the Trial Balance would still agree.
Similarly, an agreed Trial Balance does not prove that all transactions have been recorded in the books of original entry. For example, a credit sale invoice were to be completely omitted from being recorded in the sales day book, the error would not be disclosed in the Trial Balance.
To conclude, we can say that a trial balance should not be recorded as a conclusive proof of the correctness of the books of account.
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