Errors and Corrections

Question 1

What is reconciling trade payables and receivables?

Answer 1

Checking the supplier/ customer accounts match the business’ memorandum ledgers

Question 2

Method for reconciliation

Answer 2

What has been done?
What should have been done?
How do I correct it?

Question 3

Double entry for a sales return

Answer 3

Dr sales Cr trade receivables

Question 4

Double entry for a purchase return

Answer 4

Dr trade payables Cr purchase returns

Question 5

Double entry for Contra

Answer 5

Dr trade payables Cr trade receivables

Question 6

Double entry for irrecoverable debts

Answer 6

Dr irrecoverable debt expense Cr trade receivables

Question 7

Double entry for refund to customer

Answer 7

Dr trade receivables Cr cash

Question 8

Double entry for refund from suppliers

Answer 8

Dr cash Cr trade payables

Question 9

Double entry for dishonoured cheque

Answer 9

Dr trade receivables Cr cash

Question 10

What is a contra?

Answer 10

The business owes money to and is owed money from the same entity - double entry uses smaller amount

Question 11

Where do entries that cannot be matched to statements go?

Answer 11

Suspense account

Question 12

What is included on the bank reconciliation statement?

Answer 12

ADD outstanding lodgement
LESS unpresented cheques

Question 13

What are the 5 types of error?

Answer 13

transposition, omission, principle, commission, compensating

Question 14

What is a transposition error?

Answer 14

When digits of numbers are recorded the wrong way around

Question 15

What is an omission error?

Answer 15

Failing to record a transaction

Question 16

What is an error of principle?

Answer 16

An accounting entry that is incorrect

Question 17

What is an error of commission?

Answer 17

Recording an entry into the wrong account of the same nature

Question 18

What is a compensating error?

Answer 18

Errors that are equal and opposite