Correction of Errors

Question 1

errors that are normally detected in the performance of accounting procedures and are immediately corrected. Examples are arithmetical errors, posting on the wrong side of an account, misstating an amount, or error of omission.

Answer 1

Clerical errors

Question 2

• errors that will affect real accounts only (for example, a debit to “Cash” was made to “Accounts Receivable”).

Answer 2

Statement of Financial Position error

Question 3

errors that will affect nominal accounts only (for example, a debit to “Utilities Expense” was made to “Depreciation Expense”).

Answer 3

Statement of Comprehensive Income Errors

Question 4

occurs when the error results in overstatement or understatement of net income, resulting in errrors in the reported assets, liabilities and/or equity (for example, omission of depreciation charges

Answer 4

Errors affecting both Statement of Financial Position and Statement of Comprehensive Income