Chapter 11 Flashcards
(14 cards)
Errors which allow the trial balance to balance
Error of admission, error of original entry, reversal of entries, error of principle, error of commission
Errors which do not allow the trial balance to balance
An equal amount error, single entry error, two debits and two credits, balance transfer error
Define error of omission
Left out from debit and credit
Define error of original entry
Both entered it wrong amount
Define reversal entries
Debbie and credit have swapped around
Define error of principle
Mathematically correct, but putting wrong accounts
Define error of commission
Mathematically correct, but one of them has been put to the wrong account through an account of the correct type
Define balance transfer error
A balance on a general ledger account is transferred incorrectly into the trial balance
Error of principle or error of commission made to the same type of account
Error of principal
How do you correct the errors that allow the trial balance to balance?
Through a journal
How do you correct the errors that caused the trial balance to not balance?
Through a suspense account and then making a journal to correct the error
What is a suspense account?
An account opened in order to make the balances on a trial balance equal what the reason for the imbalance is discovered and corrected
Will the suspense account appear in the final accounts?
No
How do you clear a suspense account?
Determine the original accountant entry which was made, decide what entry should’ve been made, make the required adjustment
