Correction Of Errors

Question 1

errors which cannot be identified with trial balance can be I identified by… (2)

Answer 1

1. control account
2. bank reconciliation statements

Question 2

what are the errors which dont effect trial balance(6/7)

Answer 2

TOPCOCC
1. original entry( transposition is a type of original entry)
2. principle
3. commission
4. omission
5. complete reversal
6. compensating errors

Question 3

steps of correcting errors in journal(3)

Answer 3

1. debit entry on top
2. indent credit entry
3. write narrative

Question 4

Error of Omission

Answer 4

this is when a transaction is not entered into any ledger account

Question 5

How to correct: Error of omission

Answer 5

1. just enter both entries into correct ledgers( as usual)
2. make journal entry

Ashika is a sole trader. On 1 March 2024, Ashika identified an error where the sale of goods worth $200 to Kiha was not entered into the ledger accounts.

Kiha 200Dr

  Sales  200r

Correction of error of omission - credit sale to Kiha not recorded

Question 6

Journal narative: error of omission?

Answer 6

Correction of error of omission - credit sale to Kiha not recorded

Question 7

Error of Original Entry

Answer 7

this is when transaction is entered into both amounts with incorrect amount

Question 8

How to correct: error of original entry

Answer 8

1. Find difference between incorrect and correct amount
2. to increase : put difference on same side
3. to decrease: put difference on other side

Question 9

show in journal:error of original entry

Answer 9

On 1 March 2024, Ashika identified an error where the sale of goods worth $200 to Kiha was entered into the sales day book as $250. Kiha’s account was debited $250, and the sales account was credited $250.

sales 50Dr
kiha 50 Cr

Correction of error of original entry - credit sale recorded as $250 instead of $200

Question 10

Journal narrative: error of original entry

Answer 10

Correction of error of original entry - credit sale recorded as $250 instead of $200

Question 11

error of complete reversal

Answer 11

this is when transaction is entered on the wrong side of both correct ledger accounts

Question 12

how to correct: error of complete reversal

Answer 12

1. double the amount entered
2. enter on opposite side

( we double cuz we need to undo the wring amount and add the right amount)

Question 13

show in journal: error of complete reversal

Answer 13

On 1 March 2024, Ashika identified an error where goods sold to Kiha, for $200, were debited to the sales account and credited to Kiha’s account.

kiha 400Dr
sales 400Cr

correction of error of complete reversal-credit sale of 200$ recorded on wrong side of the accounts

Question 14

journal narrative: error of complete reversal

Answer 14

correction of error of complete reversal-credit sale of 200$ recorded on wrong side of the accounts

Question 15

Error of commission

Answer 15

this is when one entry of the transaction is entered into the wrong account but the type of account if correct

eg: travel expenses in stationary expenses acc( both are expense Acounts)

Question 16

How to correct: Error of Comission

Answer 16

1. undo entry in wrong account( same entry on opposite side
2. enter correct entry in correct amount

Question 17

Show in Journal: Error of Comission

Answer 17

Ashika identified an error where goods were sold to Kiha for $200, but the entry was made in Dinah’s account in the receivables ledger. The transaction was entered correctly in the sales account.

kiha 200Dr
Dinah 200Cr

correction of error of commission- credit sale was debited to Dinah’s account instead of Kiha’s

Question 18

journal narative : error of comission

Answer 18

redit sale was debited to Dinah’s account instead of Kiha’s

Question 19

Error of Principle

Answer 19

this is when one entry of a transaction is entered into the incorrect account( but the account has the same cr or dr balance cuz if not it will effect trial balance)

eg: travel expense entered into motor vehicle account( expense in asset acc: both debit balance)

Question 20

How to correct: error of principle

Answer 20

same as error of commission

1. undo entry in wrong account(same entry other side)
2. enter amount in correct account

Question 23

Show in Journal: error of principle

Answer 23

Ashika identified an error where $50 was paid for petrol, but the entry was made in the vehicles account rather than the vehicle expenses account. The transaction was entered correctly in the cash book.

vehicle expenses 50Dr
vehicle 50 Cr

Correction of error of principle - vehicle expenses were debited to the vehicles account

Question 25

Journal Narative: error of principle

Answer 25

Correction of error of principle - vehicle expenses were debited to the vehicles account

Question 26

Compensating Errors

Answer 26

this is when the effects of unrelated errors balance out when totalling the debits and credits eg:A business sells $100 worth of goods to Steve and $200 worth of goods to Tony ~The transactions were entered correctly into the sales account ~Both Steve and Tony’s accounts were debited $150 ~Overall the assets have still increased by $300

Question 27

How to correct: compensating errors

Answer 27

1. correct each error separately 2. The total of the debits should equal the total of the credits

Question 28

Show in Journal: Compensating Errors

Answer 28

Ashika sold $100 worth of goods to Steve and $200 worth of goods to Tony. On 1 March 2024, Ashika identified that both of these transactions were entered into the receivables ledger accounts as $150. The transactions were entered correctly into the sales account Steve’s account was debited $150 instead of $100 Therefore, credit $50 to Steve’s account to reduce the balance Tony’s account was debited $150 instead of $200 Therefore, debit $50 to Tony’s account to increase the balance Tony 50Dr Steve 50Cr Correction of compensating errors - Tony’s account was understated by $50 and Steve’s account was overstated by $50

Question 29

Journal Narative: Compensating errors