Correction of Errors and Suspense Accounts Flashcards
what is a suspense account
used to correct the trail balance temporarily when there are errors that make it not balancw
what are the errors that do not effect the trial balance
Comission
Reversal
Original Entry
Prinicple
Compensating
Omission
what is an error of commission
entry made in wrong customer/supplier account
primary day books still correct so no effect on trial balance
what is an error of reversal
entries reversed eg credit what was meant to be debited and debit what was meant to be credited
will not effect trial balance
what is an error of original entry
both sides are entered wrong (eg wrong number in both entries)
will not effect trial balance
what is an error of principle
accounting treatment has been incorrect eg entry into wrong accounts
will not effect trial balance
what is an error of compensatin
one error compensates for another and cancel one another out, so no effect on the trial balance
what is an error of omission
transaction left out completely
no effect on trial balance
how to resolve error of omission
make correct entries into relevant accounts
how to correct an error of comission
adjust prime day books
how to correct an error of priciple
fix incorrect inputs
put in new inputs
what is an error of transposition
numbers in figure out of order
how to correct an error of reversal
double original entries but on the other side
examples of errors that do effect the trial balance
one sided entries
debit != credit
2x credits or 2x debits
omitted a balance
how is a suspense account eliminated
journal entries
