Analyzing Transactions
LO 4b – Discovery and
Correction of Errors
@ 2012, Cengage Learning

Trial Balance Errors
Errors can be made in the accounting system that affect the trial balance.
LO 4

LO 4
Errors Causing Unequal Trial Balance
Errors
Trial balance preparation errors
Account balance errors
Posting errors
Column incorrectly added
Amount incorrectly entered on trial balance
Balance entered in wrong column or omitted
Balance incorrectly computed
Balance entered in wrong column of account
Wrong amount posted to an account
Debit posted as credit, or vice versa
Debit or credit posting omitted

Tips for Discovering Errors
Tip 1: Check for a difference of l0, 100, or
1,000 between the two column totals.
This is a good indication that one of the columns has been incorrectly totaled.
LO 4

Tips for Discovering Errors
Tip 2: Check if the difference between the totals can be evenly divided by two.
A posting may have been omitted or a debit may have been posted as a credit
(or vice versa).
LO 4

LO 4
Trial Balance Errors - Transposition
 A transposition occurs when the order of the digits is changed by mistake, such as writing $542 as $452 or $524.

Trial Balance Errors - Slide
 In a slide , the entire number is moved one or more spaces to the right or the left by mistake, such as writing $542.00 as $54.20 or $97.50 as $975.00.
LO 4

Discovery of Errors
Among the types of errors that will not cause the trial balance totals to be unequal are the following:
1.
Failing to record a transaction or to post a transaction.
2.
Recording the same erroneous amount for both the debit and the credit parts of a transaction.
LO 4

Discovery of Errors
Among the types of errors that will not cause the trial balance totals to be unequal are the following:
3.
Recording the same transaction more than once.
4.
Posting a part of a transaction correctly as a debit or credit but to the wrong account.
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LO 4
Errors Not Affecting the Trial Balance
 If an error has already been journalized and posted to the ledger, a correcting journal entry is normally prepared.

LO 4
Errors Not Affecting the Trial Balance
 Another type of error is a posting error.
 Assume that on May 5 a $12,500 purchase of office equipment on account was incorrectly journalized and posted as a debit to supplies and a credit to accounts payable for $12,500.

LO 4
Errors Not Affecting the Trial Balance
 The entry to correct the error is: