4.5 Out of Balance

Question 1

Quick tests for detecting a single error:

Answer 1

• Difference is a multiple of 10
• Check ledger & journal to see of tb difference is equal to an amount entered
• Divide the tb difference by 2
• Divide the tb difference by 9

Question 2

Difference is a multiple of 10:

Answer 2

Most likely an error in adding the totals
- Re-add the trial balance columns
- If that doesn’t work, re-calculate the balance of each account

Question 3

Check ledger & journal to see if tb difference is equal to an amount entered

Answer 3

Most likely a debit or credit was missed
- Verify the transaction to make sure it was entered properly

Question 4

Divide the tb difference by 2

Answer 4

Search the trial balance and the ledger accounts for this divided amount
- Look to see if a DR was posted as a CR, or visa versa
- Verify the transaction to make sure it was entered properly

Question 5

Divide the tb difference by 9

Answer 5

IF the difference divides equally by 9, it is most likely a transposition error or a decimal point error

Question 6

Transposition error

Answer 6

means changing the order of digits in a number, when transferring figures from one place to another (i.e. journal to ledger)
- Correct error when found, and re-add columns

Question 7

Decimal point error

Answer 7

example: $1.19 is entered as $119.00