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

    Nat west service includes one of the best no-claims discounts in the market, with up to 20% off for three or more claims free years. There is a choice of payment options with a 5% discount if you pay for a years cover in one electronic payment.

  2. What does Finance involve.

    a profit is when the right number of products to exceed the break even point, break even is useful because it tells me how much I need to sell in order for me to be able to cover my costs.

  1. A Brief Account of the Adsteam Saga

    Adsteam knew well what the accounting standards allowed them to do in order to keep the high gearing on its subsidiaries off its balance sheet. Clearly misleading, these assertions were given further credibility with the mark of approval from Deloitte, the company's auditors of the time.

  2. The Purpose of Keeping Accurate Accounts

    Keep stakeholders informed - can improve investor's confidence and can make more contributions by investing in more money into the business if they are regularly informed about the success of the business. Paying high dividends to shareholders and informing them on future dividends can make shareholders invest more money.

  1. 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)

  2. Management Accounting Report.

    2,000 100,000 60,000 160,000 120,000 (40,000) 3,000 150,000 60,000 210,000 180,000 (30,000) 4,000 200,000 60,000 260,000 240,000 (20,000) 5,000 250,000 60,000 310,000 300,000 (10,000) 6,000 300,000 60,000 360,000 360,000 00,000 7,000 350,000 60,000 410,000 420,000 10,000 8,000 400,000 60,000 460,000 480,000 20,000 9,000 450,000 60,000 510,000 540,000 30,000 10,000 500,000 60,000 560,000 600,000 40,000 The graph

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

    Capital repayment is usually enabled by regular investment over the required number of years into one or more of the following plans: Individual Savings Account, Unit Trusts, Investment Trusts, Endowment Policies and the Tax Free cash from personal pension plans.

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

    Process costing is a method of cost accounting applied to production carried out by a series of chemical or operational stages or processes. Its characteristics are that costs are accumulated for the whole production process and that average unit costs of production are computed at each stage.

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