• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Errors that do not affect the Trial Balance.

Extracts from this document...


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.


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.


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.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Accounting & Finance section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Accounting & Finance essays

  1. The Purpose of Keeping Accurate Accounts

    in any way encourage an accountant to advocate the consistency concept - thereby allowing the error to remain uncorrected. However, within the general framework, judgement may have to be applied for amounts which are not material. In other words, the materiality concept may be recognised so long as it is not in conflict with Generally Accepted Accounting Principles (GAAP).

  2. This report has been produced as evidence for Unit 9 - 'Financial Services' - ...

    It's important for Paul and Anna to know they are getting the best deal and service and provider. It important Paul and Anna check the likely return on chosen investment using the yield and return figures. Personal Loan With rates as low as 9.9% typical APR, see how much you

  1. What does Finance involve.

    However the amount paid per week is not so much and is very cheap so it will not affect my business. Form the fifth option I have decided that I will re-mortgage my flat and raise the money I need for my business. I will re-mortgage my flat for �17,000.

  2. A Brief Account of the Adsteam Saga

    Profit Adsteam's financial statements did not really reflect the true and fair view, because they were based on the intra-group transactions. Dividend from the other members of the group contributed to a large part of each company's income. The non-consolidation and consolidation reports also give quite different pictures of the company's performance.

  1. Identifying and describing the main financial service needs for a student starting at university

    You can bank at any time of the day or night, from home, work or abroad, with our 24-hour telephone and Online Banking services. System updates may mean that the service is unavailable for a brief period during the early hours of the morning.

  2. Project DR: Manufacturing Division

    LTA began the analysis with Milestone 1. Milestone 1 A list of specifics to milestone 1 is given below. a) Sort out essential and non-essential data for this project b) Agree on divisional allocation methods, c) Agree on transfer pricing between Manufacturing and the Service division 1)

  1. Management Accounting Report.

    Summary (Break-even) This product is going to be successful and make a reasonable profit for the company, but if the variable cost goes up by �15 then this product is going to be too risky for the company. This is because the company has to sell at least 6,000 dispensers to cover fixed and variable costs.

  2. Responsible accounting is the ability to conduct business in a way that is not ...

    is needed, where this information can be obtained, and how this information can be used. By using management accounting techniques, such as, process costing and cost allocation, managers must consider ways in which accounting information may be accumulated, analyzed and presented in relation to specific problems, decisions and day-to-day tasks of business management (Slagmulder, 1999).

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work