3 - Errors & Suspense Accounts Flashcards
What are the errors detected by the trial balance?
- A single entry
- A casting error
- A transposition error
- An extraction error
- An omission error
- Two entries on one side
A single entry
Only one side of a double entry has been made, so the trial balance will not balance
A casting error
A list has been totalled incorrectly, or a ledger balance has been added incorrectly. If one account balance has been incorrectly totalled, or one side of the trial balance miscast, the trial balance will not balance
A transposition error
When an amount has accidentally been transposed (the numbers have switched position) & incorrectly recorded in one ledger account, then the trail balance will not balance. E.g. £1572 instead of £1275
An extraction error
If a ledger account balance is incorrectly recorded on the trial balance either by recording the incorrect figure or putting the balance on the wrong side of the trial balance, the the trial balance will not balance
An omission error
If a ledger account balance is accidentally omitted from the trial balance then the trial balance will not balance
Two entries on one side
If a transaction is entered as two debits or two credits then the trial balance will not balance
What are the errors that are not detected by the trial balance?
- An error of original entry
- An error of commission
- An error of principle
- An error of omission
- A compensating error
An error of original entry
The wrong figure is entered as both the debit & credit entry
An error of commission
A debit & an equal credit entry have been made but one of the entries has been to the wrong account. E.g an entry was made to the Rent account rather than the Electricity expense account
An error of principle
This is similar to an error of commission but the entry has been made in the wrong type of account. E.g. A purchase of a motor vehicle was debited to the motor expenses account
An error of omission
An entire double entry is omitted from the ledger accounts
A compensating error
Two separate errors are made, one on the debit side & one on the credit side. By coincidence, the two errors are for the same amount & cancel each other out
