Chapter 11 - Errors and suspense accounts Flashcards
What is an error of omission?
An error where a transaction has been omitted from the accounting records.
What is an error of commision?
An error where transaction has been recorded in the wrong account but in the right financial statement.
What is an error of principle?
An error where a transaction has conceptually been recorded as incorrectly, e.g. debiting as an expense instead of an asset.
What is a compensating error?
An error where 2 different errors have been made which cancel each other out.
What is a transposition error?
An error where the correct double entry has been made but 2 digits in the amounts were recorded the wrong way round.
What is a single-sided entry error?
An error where only one half of the dual effect has been recorded?
What is a different values error?
An error where a transaction has been recorded using different values for the debit and credit entries.
What is an extraction error?
An error where a balance was omitted/ recorded wrongly when the ledger balances were extracted to compile the trial balance.
What must be cleared before the financial statements can be prepared?
The suspense account
