
Understanding Compensating Errors in Accounting
Quiz
•
Other
•
11th Grade
•
Practice Problem
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Medium
Muhammad Javed
Used 1+ times
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8 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is an error of compensation in accounting?
An error that affects only one side of the trial balance.
An error where one mistake is counterbalanced by another mistake in a different account.
An error that results in a mismatch between the debit and credit sides of the trial balance.
An error that occurs due to incorrect calculations in financial statements.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following is an example of a compensating error?
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the impact of compensating errors on financial statements?
They always result in a mismatch in the trial balance.
They can mask inaccuracies, leading to incorrect profitability analysis.
They have no impact on financial statements.
They always lead to an overstatement of assets.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following strategies can help prevent compensating errors?
Ignoring minor discrepancies in accounts.
Conducting regular audits and using automated systems.
Relying solely on manual calculations.
Avoiding the use of accounting software.
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Net income is overstated by $2,000.
Net income is understated by $2,000.
Net income remains unaffected.
Net income is overstated by $4,000.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following is a cause of compensating errors?
Errors in data entry due to oversight.
Intentional manipulation of accounts.
Errors in the original entry that are not corrected.
Both A and C.
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