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Errors that do not affect the Trial Balance.

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Introduction

Errors that do not affect the Trial Balance Errors that do not affect the trial balance means that for every debit there is a credit and vice versa. So in this way the trial balance still balances off. To arrange such errors it is important to use the journal, when they are posted into the journal they are then posted into the ledgers as overcasting (The amount higher then its original entry) or under-casting (The amount is lower than its original entry) These errors are: Error of Omission When a transaction is completely left out - that means neither the debit nor the credit was entered, thus it has to be corrected by entering the journal entries in the right order. Example: the sale of goods, Lm 16 to M. Gauci, has been completely omitted form the books. Journal Dr. Cr. Lm Lm M. Gauci 16 Sales a/c 16 Correction of omission of sales Invoice No. ... from sales journal Error of Commission This error is when both transactions are made but the wrong clients account was used thus causing complaints from clients about their statement that it is incorrect. To arrange such an error it is important to cancel out the wrong clients account and then entered in the right account. ...read more.

Middle

Example: the sales account is overcast by Lm. 20, as also is the wages account. The trial balance therefore still 'balances' Journal Dr. Cr. Lm Lm Sales account 72 Wages Account 72 Correction of overcasts of Lm 20 each in the sales account and the Wages account which compensated for each other. Complete Reversal of Entries The debit is sent to the credit and the credit is sent to the debit but with the right amounts. To correct such an error it is first needed to delete the error made by putting the amount on the opposite side and also making the same transaction on the right side like the previous deletion - thus to make it easier the amount should be doubled and the correction is done once on the opposite side of the error made. Example: a payment of cash of Lm 21 to R. Micallef was entered on the receipts side of the cash book error and credited to R. Micallef account. The entries should have been: Cash Lm Lm R. Micallef 21 R. Micallef Lm Lm Cash 21 But were entered as: Cash Lm Lm R. Micallef 21 R. Micallef Lm Lm Cash 21 To arrange such an error we have to: Cash Lm Lm R. ...read more.

Conclusion

Such an error may be corrected by calculating the difference and putting it in the right side of the transaction and on the opposite side the same amount goes to the suspense account. Example: Dr. Cash account Lm100 Cr. Sales account Lm 10 Cr. Suspense account Lm 90 Corrected by the following: Dr. Suspense account Lm 90 Cr. Sales account Lm 90 Error of debiting two accounts or crediting two accounts for one transaction. This occurs when in one transaction it is found that it is debited twice or credited twice. To arrange such an error the amount is doubled and the wrong side is deleted and the same amount is sent to the suspense account. Example: Dr. Cash account Lm 100 Dr. Sales account Lm 100 - thus Cr. Suspense account Lm 100 Corrected by the following: Dr. Suspense account Lm 200 Cr. Sales account Lm 200 Errors in balancing the accounts Such an error occurs when the balancing of the accounts is done wrongly. Errors in transferring balances to trial balance. This error is worked like the "error of incorrect figures in one account" this is a slight error just that the error occurs when there is the transfer between the balances to the trial balance. Checking account balances transferred to the trial balance should corrected this error. Financial Recording 4 By: Kirsten Ann Demicoli ...read more.

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