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    Accounting Error QNS

    Uploaded by

    Gerald Magaita
    This document discusses different types of accounting errors that would not affect the trial balance totals being in balance, including: 1. Errors of omission where a transaction is completely omitted from the books. 2. Errors of commission where the correct amount is entered in the wrong person's account. 3. Errors of principle where an item is entered in the wrong class of account, such as an asset in an expense account. 4. Compensating errors where two errors cancel each other out, such as an account being overstated by the same amount on both sides. The document also provides examples of journal entries needed to correct various accounting errors.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Accounting Error QNS

    Uploaded by

    Gerald Magaita
    262 views3 pages
    This document discusses different types of accounting errors that would not affect the trial balance totals being in balance, including: 1. Errors of omission where a transaction is completely omitted from the books. 2. Errors of commission where the correct amount is entered in the wrong person's account. 3. Errors of principle where an item is entered in the wrong class of account, such as an asset in an expense account. 4. Compensating errors where two errors cancel each other out, such as an account being overstated by the same amount on both sides. The document also provides examples of journal entries needed to correct various accounting errors.

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    ACCOUNTING ERROR QNS

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    This document discusses different types of accounting errors that would not affect the trial balance totals being in balance, including: 1. Errors of omission where a transaction is completely omitted from the books. 2. Errors of commission where the correct amount is entered in the wrong person's account. 3. Errors of principle where an item is entered in the wrong class of account, such as an asset in an expense account. 4. Compensating errors where two errors cancel each other out, such as an account being overstated by the same amount on both sides. The document also provides examples of journal entries needed to correct various accounting errors.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    262 views3 pages

    Accounting Error QNS

    Uploaded by

    Gerald Magaita
    This document discusses different types of accounting errors that would not affect the trial balance totals being in balance, including: 1. Errors of omission where a transaction is completely omitted from the books. 2. Errors of commission where the correct amount is entered in the wrong person's account. 3. Errors of principle where an item is entered in the wrong class of account, such as an asset in an expense account. 4. Compensating errors where two errors cancel each other out, such as an account being overstated by the same amount on both sides. The document also provides examples of journal entries needed to correct various accounting errors.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    ACCOUNTING ERROR

    There are certain kinds of error which would not affect the agreement of the trial
    balance totals, and we will now consider these:

    1 Errors of omission – where a transaction is completely omitted from the books. If


    we sold £90 goods to J Brewer, but did not enter it in either the sales or Brewer’s
    personal account, the trial balance would still ‘balance’.

    2 Errors of commission – this type of error occurs when the correct amount is
    entered but in the wrong person’s account, e.g. where a sale of £11 to C Green is
    entered in the account of K Green. It will be noted that the correct class of account
    was used, both the accounts concerned being personal accounts.

    3 Errors of principle – where an item is entered in the wrong class of account, e.g.
    if purchase of a fixed asset, such as a van, is debited to an expenses account, such
    as motor expenses account.

    4 Compensating errors – where errors cancel each other out. If the sales account
    was added up to be £10 too much and the purchases account was also added up to
    be £10 too much, then these two errors would cancel out in the trial balance. This
    is because the totals of both the debit side and the credit side of the trial balance
    will be £10 too much.

    5 Errors of original entry – where the original figure is incorrect, yet double entry
    is still observed using this incorrect figure. An instance of this could be where there
    were sales of £150 goods but an error is made in calculating the sales invoice. If it
    were calculated as £130, and £130 were credited as sales and £130 were debited to
    the personal account of the customer, the trial balance would still balance.

    6 Complete reversal of entries – where the correct accounts are used but each item
    is shown on
    the wrong side of the account. Suppose we had paid a cheque to D Williams for £200,
    the double entry of which is Cr Bank £200, Dr D Williams £200. In error it is entered
    as Cr D Williams £200, Dr Bank £200. The trial balance totals will still agree.

    7 Transposition errors – where the wrong sequence of the individual characters


    within a number was entered. For example, £142 entered instead of £124. This is
    quite a common error and is very difficult to spot when the error has occurred in
    both the debit and the credit entries, as the trial balance would still balance. (It is
    more common for this error to occur on one side of the double entry only.)

    Prepared by Mr Mfinanga-NIT
    ACCOUNTING ERROR QUESTIONS
    1 Show the journal entries necessary to correct the following errors:
    (a) A sale of goods £412 to T More had been entered in T Mone’s account.
    (b) The purchase of a machine on credit from J Frank for £619 had been completely
    omitted from our books.
    (c) The purchase of a computer for £550 had been entered in error in the Office
    Expenses account.
    (d) A sale of £120 to B Wood had been entered in the books, both debit and credit,
    as £102.
    (e) Commission received £164 had been entered in error in the Sales account.
    (f ) A receipt of cash from T Blair £68 had been entered on the credit side of the
    cash book and the debit side of T Blair’s account.
    (g) A purchase of goods £372 had been entered in error on the debit side of the
    Drawings account.
    (h) Discounts Allowed £48 had been entered in error on the debit side of the
    Discounts Received account.

    2 Show the journal entries needed to correct the following errors:


    (a) Purchases £1,410 on credit from A Ray had been entered in B Roy’s account.
    (b) A cheque of £94 paid for printing had been entered in the cash column of the
    cash book instead of in the bank column.
    (c) Sale of goods £734 on credit to D Rolls had been entered in error in D Rollo’s
    account.
    (d) Purchase of goods on credit L Hand £819 entered in the correct accounts in error
    as £891.
    (e) Cash paid to G Boyd £64 entered on the debit side of the cash book and the credit
    side of G Boyd’s account.
    (f ) A sale of fittings £320 had been entered in the Sales account.
    (g) Cash withdrawn from bank £200 had been entered in the cash column on the
    credit side of the cash book, and in the bank column on the debit side.
    (h) Purchase of goods £1,182 has been entered in error in the Furnishings account.

    3 Journal entries to correct the following are required, but the narratives can be
    omitted.
    (a) Rent Received £430 have been credited to the Commissions Received account.
    (b) Bank charges £34 have been debited to the Business Rates account.
    (c) Completely omitted from the books is a payment of Motor Expenses by cheque
    £37.
    (d) A purchase of a fax machine £242 has been entered in the Purchases account.
    (e) Returns inwards £216 have been entered on the debit side of the Returns
    Outwards account.
    (f ) A loan from G Bain £2,000 has been entered on the credit side of the Capital
    account.
    (g) Loan interest of £400 has been debited to the Van account.
    (h) Goods taken for own use £84 have been debited to the Purchases account and
    credited to Drawings.

    Prepared by Mr Mfinanga-NIT
    4. Give the journal entries needed to record the corrections of the following.
    Narratives are
    not required.
    a) Extra capital of £5,000 paid into the bank had been credited to Sales account.
    (b) Goods taken for own use £72 had been debited to Sundry Expenses.
    (c) Private rent £191 had been debited to the Rent account.
    (d) A purchase of goods from D Pine £246 had been entered in the books as £426.
    (e) Cash banked £410 had been credited to the bank column and debited to the cash
    column in the cash book.
    (f ) Cash drawings of £120 had been credited to the bank column of the cash book.
    (g) Returns inwards £195 from G Will had been entered in error in T Young’s account.
    (h) A sale of a printer for £100 had been credited to Office Expenses.

    Note : all correction of errors are done on Journal accounting and nevertheless

    Prepared by Mr Mfinanga-NIT

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