Chapter 16 - The TB, accounting error and suspense accounts Flashcards
What are errors where the TB still balances? (7)
Error of omission
Error of commission
Error of principle
Error of original entry
Reversal of entries
Duplication of entries
Compensating errors
What are errors where the TB does not balance? (5)
Posting only one part of the double-entry
Posting a different value of debits and credits
Arithmetic errors
Opening balance not brought down correctly
Extraction error
What is error of omission?
Transaction not recorded
What is error of comission?
Wrong account e.g., rates when its rent
What is an error of principle?
Account principle, e.g., assets put to R&R
What is an error of compensation?
Two errors cancelling each other out
What is an error of original entry?
Wrong amount e.g., 67 when should be 69
What is an error of reversal of entries?
Debit instead of credit
What approach should be used when rectifying a TB error?
1) What should the double-entry have been?
2) What was the double-entry actually made?
3) What correction is required?
What is a transposition entry?
£527 is recorded as £725
Why are suspense accounts created?
differences in a TB: when debits are not equal to the credits, the difference is put to a suspense account
The control account is adjusted for what?
- errors in items posted to the day books
- casting errors in the day books
- incorrect amounts recorded in the control account
- items recorded on the incorrect side in the control account
- items omitted in the control accounts
The total list of individual balances is adjusted for what?
- errors in items posted in the day books
- casting errors in the list of balances
- incorrect amounts recorded in the list
- debit balances treated as credit balances and vice - versa
- amounts recorded on the wrong side of the individual receivables/payables accounts
