11. The trial balance, errors and the suspense account

Question 1

What should balance on the initial trial balance

Answer 1

debits should equal credits

Question 2

What do you need to set up if the intial balnce does not balance

Answer 2

You need to set up a suspense account

Question 3

Whats a suspense account

Answer 3

A temporary account set up to make the trial balance

Question 4

Can a suspense account be included in the end of the year

Answer 4

No, its a temporary account.

Question 5

What are the 5 types of errors which allow the trial balance to balance

Answer 5

1. Error of omission
2. Error of original entry
3. Reversal of entries
4. Error of principle
5. Error of commission

Question 6

What’s error of omission

Answer 6

Both sides of the transaction have been completely left out a rent payment is not recorded in the general ledger

Question 7

Whats the error of original entry

Answer 7

Debits = Credits but the amount is incorrect

Question 8

What’s the reversal of entries

Answer 8

Transaction is recorded at correct amount but debit and credit entries have been reversed eg posting a debit in a credit

Question 9

Error of principle

Answer 9

DEBITS = CREDITS but one of the entries has been made in the wrong account eg SOFP put into the SPL

Question 10

Error of commission

Answer 10

Debits = Credits but one of the entries has been made to the wrong account, but not the wrong type of account eg £200 spent on telephone costs has been recorded as:

DEBIT: Insurance expense £200