Verification of accounting records Flashcards
name the errors not affecting trial balance
error of omission
error of commission
error of principle
error of original entry
error of complete reversal
compensating error
what is the error of omission?
when a transaction has been completely omitted from the accounting records.
what is the error of commision?
this occurs when a transaction is entered using the correct amount and on the correct side but at the wrong account of the same class
what is the error of principle?
when a transaction is entered using the correct amount and on the correct side, but in the wrong class of account
What is the error of original entry?
this occurs when an incorrect figure is used when a transaction is first entered in the accounting records, the double entry will therefor use incorrect figures
what is the error of complete reversal?
this occurs when the correct amount is entered in the correct accounts but the entry is made on the wrong side of each account
what is a compensating error?
these occurs when two or more errors cancel each other out
name the errors affecting trial balance
1- incorrect additions in any account
2- entering a different amount on the debit side
from the amount on the credit side or vice versa
3- making an entry in only one account
4- making an entry on the wrong account
5- making an entry on the wrong side of the
correct account
6- entering an entry twice on the same side of the
ledger account
7- an error in addition within the trial balance
what is a suspense account?
a suspense account is opened as a temporary measure when the trial balance fails to agree. it has an balance equal to the net balance of all the errors in the ledger
state reasons why it is necessary to open a suspense account
to endure that the totals of the trial balance agree
to allow draft financial statements to be prepared
to facilitate the correction of accounts
to make sure that all errors are discovered
