Mr Jey Knowledge Test 15nth Jan Flashcards
RAIL
Running Cost, Assets, Income, Liability
Addition error
There have been mathematical errors when calculating balances on accounts or when calculating totals in books of prime entry
Partial omission error
An item has only been entered once
Transposition error
An amount has been posted with two numbers the wrong way around
(e.g. £456 instead of £465)
Unequal posting error
Different amounts have been debited and credited
For example, one side of the double entry has been wrongly posted
Why are some errors not shown on the trial balance
The total debits will still be equal to the total credits
Error of omission
A transaction has been completely omitted from the accounting records
Complete reversal (reversal of entries)
The debit and credit entries have been made the wrong way around
Error of commission
A transaction has been entered in the wrong account but the right type of account
(e.g. the wrong expense, or the wrong account in the receivables ledger or payables ledger)
Error of principle
A transaction has been entered in the wrong type of account
(e.g. ‘Motor expenses’ instead of ‘Motor vehicles’)
Error of original entry
The correct accounts have been used, but the wrong amount was entered in both of them
Compensating error
Two errors cancel each other out
Why does the trial balance show if some errors have taken place?
The total debits will not be equal to the total credits
