Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Accounting > Verifying Accounting Records > Flashcards

Verifying Accounting Records Flashcards

1
Q

What does the bank balance in the cash book need to agree with?

A

The balance on the bank statement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What if the bank balance in the cash book isn’t equal to the bank statement balance?

A

If the two balances aren’t equal check for errors or reasons why

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is a big reason the bank balance in cash book would not be equal to the bank statement balance?

A

Timing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What needs to be done to check the cash book?

A

A bank reconciliation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is the first step of a bank reconciliation?

A

Tick off all the items that appear on both the bank statement and cash book.

## Footnote

Tick on both

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the second step of a bank reconciliation?

A

Add any items from bank statement that aren’t present on the cash book to the cash book.

##Footnote

Then tick them off when they appear on both

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is the third step of a bank reconciliation?

A

Circle items that aren’t ticked off on cash book

##Footnote

They’re needed for the reconciliation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is the fourth step of a bank reconciliation?

A

Balance off the cash book now it’s been updated

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What if the fifth step of a bank reconciliation?

A

Produce a reconciliation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is the equation for the reconciliation?

A

Balance from updated balance

Add unpresented cheques

Subtract lodgements not yet credited

Equals balance for bank statement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Unpresented cheques

A

Items that aren’t ticked off in the cash book on the CREDIT SIDE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Why are unpresented cheques added to the updated balance?

A

They’re added as they haven’t come out of the bank yet.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Lodgements not yet credited

A

These are payments into the bank that aren’t on the bank statement due to timing.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What if there are errors made by the bank?

A

Any errors made from the bank should be taken off but don’t adjust the cash book as it’s correct.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the Trial Balance extracted from?

A

Detailed accounts in ledgers that are usually done at the end of the financial period.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Why is the Trial Balance important in the accounting process?

A

It acts as an accuracy check on the ledgers account balance.

17
Q

What does the Trial Balance give?

A

Figures needed to prepare the financial statement.

18
Q

What does the Trial Balance consist of?

A

Headings from general ledgers accounts
Credit and debit columns

19
Q

Main Errors in Trial Balance

A

Addition errors
Partial Omnission
Partial Transposition
Unequal Posting

20
Q

Partial Omnission

A

Where a ledger balance has been left out

21
Q

Partial Transposition

A

Where the numbers have been transposed
e.g. 86 instead of 68 on one side of the account only

22
Q

Unequal Posting

A

Where a debit and credit entry where entered incorrectly into the ledger accounts
e.g. Dr bank £300 Cr sales £200

23
Q

What is the first step of identifying errors in the Trial Balance?

A

Add up the columns to ensure it isn’t just a simple addition error.

24
Q

What is the second step in identifying errors within the Trial Balance?

A

If there is no addition errors then find the difference between the 2 columns.
Check for this number in the list of balances to ensure it’s not missed out.

25
Q

What is the third step of identifying errors in the Trial Balance?

A

If the difference isn’t in the list of balances then divide it by 2. See if this number is in the trial balance. If it is it’s most likely in the wrong column.

26
Q

What is the fourth step of finding errors within the Trial Balance?

A

If this number isn’t there divide the difference from before by 9. This will show us if the number has been transposed.

27
Q

What are the Errors not revealed in the Trial Balance?

A

Commision
Reversal
Compensating
Omission
Original entry
Principle

28
Q

Commission

A

an entry is made into the incorrect account.

29
Q

Reversal

A

a debit entry is made as a credit entry and the credit entry is made as a debit entry.

30
Q

Compensating

A

two completely different errors have occurred but for the same amount, so one error has compensated the other.

31
Q

Omission

A

neither a debit or credit entry is made.

For instance, a cash purchase was made, but no entry has been made in any of the accounting records.

32
Q

Original entry

A

the original transaction was entered incorrectly into the books of prime entry.

33
Q

What do you open when the Trial Balance doesn’t equal the balance?

A

Open a Suspense Account

34
Q

What does the Suspense Account hold?

A

The difference until the error is found

35
Q

What is a key aspect of the Suspense Account?

A

It is temporary and once all the errors are corrected the balance of it is 0

Accounting (12 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions