Accounting for IGCSE & O level - Accounting Procedures (Section 3 - No. 8)
Which of the following statements accurately describes a compensating error?
The trial balance will always be out of balance.
Two or more errors offset each other.
The errors always involve the same amount.
The errors always affect the profit and loss account.
Explanation
A compensating error is when two or more errors offset each other, and the errors involve the same amount.
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