Journal, Ledger and Trial Balance: Rules of Debit/Credit, Posting and Errors Overview Questions

Question 1

Define journal.

Accepted Answer

**Journal** is a book in which business transactions are recorded in chronological order with debit and credit and narration.

Question 2

Define ledger.

Accepted Answer

**Ledger** is a book (set of accounts) in which transactions are classified and recorded account-wise.

Question 3

What is trial balance?

Accepted Answer

**Trial balance** is a statement showing debit and credit balances of all ledger accounts at a particular date.

Question 4

What is posting?

Accepted Answer

**Posting** is the process of transferring journal entries into the relevant ledger accounts.

Question 5

State the golden rule for Nominal account.

Accepted Answer

Nominal account: **Debit all expenses and losses; credit all incomes and gains**.

Question 6

State one objective of trial balance.

Accepted Answer

One objective of trial balance is to check **arithmetical accuracy** of ledger posting and balancing.

Question 7

Explain golden rules of accounting (any three) with a table.

Accepted Answer

### **Golden Rules of Accounting**

- **Personal A/c**: debit the **receiver**, credit the **giver**.
- **Real A/c**: debit what **comes in**, credit what **goes out**.
- **Nominal A/c**: debit **expenses/losses**, credit **incomes/gains**.

Table:

| Account type | Debit | Credit |
|---|---|---|
| Personal | receiver | giver |
| Real | comes in | goes out |
| Nominal | expenses/losses | incomes/gains |

Thus, golden rules help decide debit and credit for journal entries.

Question 8

Explain modern approach of debit and credit using accounting equation (any three points).

Accepted Answer

Modern approach uses accounting equation **Assets = Liabilities + Capital**.

Key points (any three):
- increase in **assets** → **debit**; decrease in assets → credit.
- increase in **liabilities** → **credit**; decrease in liabilities → debit.
- **expenses** increase → debit; **income/capital** increase → credit.

Hence, modern approach quickly connects transactions to the effect on assets, liabilities, capital, income and expenses.

Question 9

Explain posting procedure from journal to ledger (any three points) with a simple flow.

Accepted Answer

Posting procedure (any three):

- debit account in journal is posted on **debit side** of that ledger account.
- credit account in journal is posted on **credit side** of that ledger account.
- proper references (folio) are written to link journal and ledger.

Flow:

```text
Journal entry → Identify debit & credit accounts → Post to respective ledger sides → Balance ledger
```

Thus, posting classifies transactions into ledger accounts for final summarisation.

Question 10

Explain objectives and limitations of trial balance (any three each).

Accepted Answer

### **Trial Balance: Objectives** (any three)
- checks **arithmetical accuracy** of ledger balances.
- helps in preparing final accounts.
- provides a summary of ledger balances.

### **Limitations** (any three)
- does not detect errors of **complete omission**.
- does not detect **errors of principle**.
- does not detect compensating errors.

Hence, trial balance agreement is necessary but not sufficient for error-free accounts.

Question 11

Explain balancing of ledger accounts (any three points) with an example.

Accepted Answer

### **Balancing of Ledger Accounts**

- balancing means totaling debit and credit sides and finding the difference.
- if **debit total > credit total**, the account shows **debit balance**.
- if **credit total > debit total**, the account shows **credit balance**.

Example: Cash A/c generally has debit balance because receipts are debited and payments are credited.

Thus, balancing helps find closing balances used in trial balance and final accounts.

Question 12

Explain errors disclosed by trial balance (any three) with examples.

Accepted Answer

Errors disclosed by trial balance are those that create **difference** between total debit and total credit.

Examples (any three):
- **one-sided posting**: a journal entry is posted only on debit side, not on credit side.
- **posting to wrong side**: credit posted on debit side or vice-versa.
- **wrong totaling/balancing** of a ledger account.

Hence, trial balance helps detect arithmetical errors but not all types of accounting errors.

Question 13

Explain types of errors in accounting (exam-style) with a table and examples.

Accepted Answer

### **Types of Errors in Accounting — Exam-Style**

Accounting errors can occur at recording, posting, totaling or classification stages.

Types (with examples):
- **Error of omission**: transaction not recorded (e.g., a purchase not entered).
- **Error of commission**: wrong posting/amount (e.g., posted to wrong account).
- **Error of principle**: wrong classification (e.g., machinery repair treated as machinery purchase).
- **Compensating error**: two errors cancel each other (TB still agrees).
- **Error of original entry**: wrong amount recorded in journal.

Table:

| Error type | Meaning | Example |
|---|---|---|
| Omission | not recorded | sale not entered |
| Commission | wrong posting/amount | posted to wrong ledger |
| Principle | wrong classification | capital vs revenue |

**Conclusion:** Many errors may not affect trial balance, so further checks and rectification are required.

Question 14

Explain errors disclosed and not disclosed by trial balance (exam-style) with a table.

Accepted Answer

### **Errors Disclosed and Not Disclosed by Trial Balance — Exam-Style**

Trial balance checks arithmetical accuracy, so it discloses only those errors which cause disagreement.

Table:

| Disclosed by Trial Balance | Not disclosed by Trial Balance |
|---|---|
| one-sided posting | complete omission |
| posting to wrong side | compensating errors |
| wrong totaling/balancing | errors of principle |

**Conclusion:** If trial balance agrees, it does not guarantee correctness; it only indicates that total debits equal total credits.

Question 15

Write the format of trial balance and explain balance method (exam-style) with a small specimen.

Accepted Answer

### **Trial Balance (Balance Method) — Exam-Style**

**Balance method** prepares trial balance using the **balances** of ledger accounts.

Format/specimen:

| Account Name | Debit (Rs.) | Credit (Rs.) |
|---|---:|---:|
| Cash |  |  |
| Purchases |  |  |
| Sales |  |  |
| Capital |  |  |
| ... | ... | ... |

Steps (brief):
- take closing balances from ledger.
- debit balances go to debit column; credit balances to credit column.
- total both columns; they should match.

**Conclusion:** Balance method is the most common method and provides a quick summary for final accounts preparation.

Account type	Debit	Credit
Personal	receiver	giver
Real	comes in	goes out
Nominal	expenses/losses	incomes/gains

Journal, Ledger and Trial Balance: Rules of Debit/Credit, Posting and Errors Overview

Golden Rules of Accounting

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