/
Chapter 32 Errors not affecting the Chapter 32 Errors not affecting the

Chapter 32 Errors not affecting the - PowerPoint Presentation

celsa-spraggs
celsa-spraggs . @celsa-spraggs
Follow
365 views
Uploaded On 2018-02-06

Chapter 32 Errors not affecting the - PPT Presentation

balancing of the trial balance Learning objectives After you have studied this chapter you should be able to Correct errors which are not revealed by a trial balance Distinguish between the different kinds of errors that may ID: 628510

error errors accounts account errors error account accounts correct entered posted entry entries books balance cash trial continued completely

Share:

Link:

Embed:

Download Presentation from below link

Download Presentation The PPT/PDF document "Chapter 32 Errors not affecting the" is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.


Presentation Transcript

Slide1

Chapter 32

Errors not affecting the

balancing of the trial balanceSlide2

Learning objectives

After you have studied this chapter, you should be able

to:

Correct errors which are not revealed by a trial

balance

Distinguish between the different kinds of errors that may

ariseSlide3

Types of errors

There are seven errors that may exist in the double entry bookkeeping but will not be revealed in a trial

balance:

Errors

of omission, where a transaction is completely omitted from the

books.

Errors

of commission, where a transaction is posted to the wrong account name, for instance

K.

Green instead of

C. Green.

Errors

of principle, where a transaction is posted to the wrong class of account, for instance confusing assets with

expenses.Slide4

Types of errors

(Continued

)

Compensating errors, where two completely separate errors cancel each other

out.

Errors

of original entry where the figure posted is

incorrect.

Complete reversal of entries, where the correct accounts are used but the postings were made on the wrong side of the

accounts.

Transposition errors, where the figures posted have been transposed, so £142 was entered instead of £

124.Slide5

How to correct errors

Errors are always corrected by:

Constructing a journal entry and including a suitable

narrative.

Posting the journal entries to the ledger accounts to correct the

error.Slide6

Error of omission

A sale of £59 worth of goods to

E.

George has been completely omitted from the

booksSlide7

Error of commission

A purchase of £44 worth of goods from

C.

Simons on 4 September was entered in error in

C.

Simpson’s account.

The

error was found on 30

September.Slide8

Error of commission

(Continued

)Slide9

Error of principle

The purchase of a machine for £200 is debited to the purchases account instead of being debited to a machinery

account.Slide10

Compensating error

In the cash book, the amount of cash sales transferred to the sales account was overstated by £20 and the amount transferred to the wages account was

also overstated by £20.Slide11

Error of original entry

A sale of £38 to

A.

Smailes

was entered in the books as £

28.Slide12

Complete reversal of entries

A payment of cash of £16 to

M.

Dickson was entered on the receipts side of the cash book in error and credited to

M.

Dickson’s

account.Slide13

Transposition error

A credit purchase from

P.

Maclaran

costing £56 was entered in the books as £

65.Slide14

Learning outcomes

You should have now

learnt:

How to describe each of a range of possible errors that can be made when recording financial transactions in the accounts that will not be detected by producing a trial

balance

How to identify and correct each of these types of

errorsSlide15

Learning outcomes

(Continued

)

That when errors are found, they should be amended by using proper double entry

procedures

That all corrections of errors should take place via the Journal, where entries are first recorded before being posted to the appropriate

ledger

accounts