Basic Record Keeping Theory Flashcards
What does it mean if the total of debits and credits in a trial balance is not equal?
It indicates a possible error in the accounts.
What might cause an omission error in the trial balance?
A debit or credit entry was recorded in only one account.
What happens if an amount is recorded incorrectly on the same side of two accounts?
The debits and credits won’t balance in the trial balance.
What is the effect of incorrect ledger balance calculation?
It can cause imbalance in the trial balance totals.
What is a transposition error?
It’s when numbers are recorded in the wrong order, e.g., $374 as $347.
How can errors occur in trial balance addition?
By totaling the debit or credit sides incorrectly.
Can a trial balance still balance if it has errors?
Yes, certain errors don’t affect the trial balance totals.
What is a placement error in the trial balance?
Recording a ledger account on the wrong side (debit instead of credit or vice ve
What is an error of omission?
It’s when a transaction isn’t recorded in the general ledger.
What happens if a transaction is recorded twice in the ledger?
: It won’t cause an imbalance in the trial balance, but it’s still an error.
What is a posting error in the trial balance?
Recording in the correct account side but in the wrong account (e.g., Equipment instead of Furniture).
What is a rule-reversal error?
Switching the debit and credit entries by mistake.
What is a compensating error?
two independent errors that offset each other in equal amounts.
Why is the trial balance still valuable despite its limitations?
It helps check double-entry accuracy before final accounts and reports.
