Errors Flashcards
What are the 7 types of error
Omission 1
Omission 2
Principle
Commission
Transposition
Original Entry 1
Original Entry 2
OO PCT OO
OOo pilates ct oo
Omission 1: Definition and E.g.
a transaction is not recorded at all
e.g. Sales or purchase invoice not recorded in the accounts
EYQ: Payment for office supplies not recorded in the accounts
aka. not included at all on either side
Neither D or C recorded
Omission 2: Definition and e.g.
only one side of an entry is posted
e.g. Cash received from customer debited to cash book but not credited to receivables
EYQ: Rent paid debited to rent expense but not credited to cash
aka. only debit is posted for a transaction no credit or vice versa
Only one of D and C is recoreded, the other is left out
Principle: Definition and e.g.
an item is posted to the correct side of the wrong type of account
e.g. Cash paid for plant repairs (expense) is debited to plant account (asset)
EYQ: Insurance expense debited to insurance asset account
aka debit is debit but wrong type of debit account eg. a diff letter in DEAD CLIC
D or C put in wrong account type - high level, d is still d and c is still c and amounts are correct
Commission: definition and e.g.
an item is entered to the correct side of the wrong account
e.g. Telephone expense debited to electricity expense in N/L
EYQ: Office supplies expense debited to stationery expense in N/L
aka aka debit is debit but wrong account eg. same letter in DEAD CLIC but within that wrong account
D or C put in wrong account type - small level, d is still d and c is still c and amounts are correct
Transposition: definition and e.g.
figures entered wrong way round in one side of an entry
e.g. Cash paid to supplier of $540 debited as $450 in payables account
EYQ: Cash received from customer of $320 credited as $230 in receivables account
aka d and c dont balance because one side entered wrong
D and C don’t match due to flipping of numbers
Original entry 1: Definition and e.g.
One side of entry incorrectly recorded
e.g. Purchases of $1,000 posted to payables as $100
EYQ: Sales of $5,000 posted to sales account as $500
Both entered in right account, one entry wrong, d and c don’t balance
D and C don’t match
Original entry 2: Definition and e.g.
one side of an entry is posted the wrong way round
e.g. Sales of $2,000 credited to receivables account
EYQ: Payment to supplier of $1,500 debited to payables account
and Example: Suppose a company makes a sale of $2,000. The correct entry should be:
Debit Accounts Receivable $2,000
Credit Sales Revenue $2,000
However, due to an error, the entry is recorded as:
Credit Accounts Receivable $2,000 (instead of Debit)
Credit Sales Revenue $2,000
aka DD or CC rather than DC
Does TB balance
YnYYnnn
OOPCTOO
Is the suspense account involved in corrections?
nYnnYYY
OOPCTOO
What is the difference between a transposition error and original entry 1
a transposition error specifically involves the swapping of digits, whereas an original entry 1 error involves recording an incorrect amount without necessarily swapping digits.
