Accounting
Lesson 59
Correction of Errors
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Paul Copeland
1
By the end of this Lesson
1. Mark the homework
..Sheet 33 Q’s 2 & 3
You will
2. Learn how to correct errors (6
types) that do not prevent the trial
balance from agreeing
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2
First ..mark your work and hand in
Homework answers
given over the next 4
slides
Give a tick for each correct
entry…add ticks to give
total for each question
Careful marking leads to
perfect answers and
outstanding exam results
….go for it!
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3
Correction of Errors…Top Tip
Even if you are asked to do the correcting double entry in the
General Journal ..always work your answer out in ledger form first!
1
2
3
3 Stage Method
Show the entries that have been done
Identify the mistake
Correct the mistake with a double entry
Together we will work through the
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H Sagrott
question
4
Business of K Sagrott…(a)
Bank
D McDuff
28
D McNab
Bank
28
D McNab
D McDuff
28
Working …you can
abbreviate
D McDuff
28
General Journal
D McDuff
Dr 28
D McNab
28
Being correction of error of commission
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Answer
5
Business of K Sagrott…(b)
Bank
Office furniture 65
Office Expenses
Bank
65
Off furniture
65
Office furniture
Office Expenses 65
General Journal
Office furniture
Dr 65
Office expenses
65
Being correction of error of principle
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6
Business of H Sagrott…(c)
Discount Received
Sundries
10
Discount All
10
Discount Allowed
Disc Rec
10
General Journal
Discount allow
Dr
Discount received
10
10
Being correction of error of commission
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7
Stop off at your Reference Point
You will need to know the 6 types of error not affecting the trial
balance
1. Error of
commission
Failure to do one’s job properly because
accounts with similar names were
mixed up
2. Error of
principle
Lack of understanding of how to do
accounts properly
3. Original error
Mistake made in a book of original entry
4. Reversal
Entire double entry the wrong way round
5. Compensating
Two unrelated mistakes that by chance
cancel each other
6. Omission
Complete double entry totally missed out
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Question 3 A Smythe
M Ltd
Pch 1 600 Purch 1 600
Purch
General Journal
Save time by
abbreviating
on working
accounts
M Ltd 1 600 M Ltd 1 600
1600
1600
Being correction of error of principle
Bank
D Gor ?
Jn 30 Disc Rec
D Gorrie
D Gor ?
Being correction of discount disallowed
Bank ?
DR 7-50
Jn 30 Fittings
D Rec 7-50
Dep on M
7-50
80
80
Being correction of error of commission
Machinery
Fit 80
80
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7-50
Machinery
Dis Rec
D Gor7-50 D Gor 7-50
Ma
Jn 30 Machinery Ltd
Purchases
M
Fittings
80
Dep 80
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9
Now ..do Q4 in your book
Even if you are asked to do the correcting double entry in the
General Journal ..always work your answer out in ledger form first!
1
2
3
3 Stage Method
Show the entries that have been done
Identify the mistake
Correct the mistake with a double entry
You should be able to do Q4 inside 10
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minutes ..without
cutting corners! 10
Big Picture on Correction of Errors
Errors that do
prevent the trial
balance totals from
agreeing
Remember the 2 parts
Errors that have
NO EFFECT on
the agreement of
the trial balance
So We will now
move on to
Done this one
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11
If the Trial Balance does not agree
Trial Balance of D Beckham at 30 April 2001
Suspense Account
Purchases 50 Bal b/d
Dr
50
Crediting Purchases
Account with £50 will
correct purchases and
debiting suspense with
£50 will clear the
suspense
Capital
Sales
Purchases
Rent
Premises
Suspense
Cr
20
30
80
6
14
50
100
Make the trial balance agree by
creating a suspense account
So if PDB was too big by
£50 this bigger figure
would have been posted
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to Purchases
In the first few days of May the error was found
Paul Copeland
(Purchases
Day Book was overcast by12£50)
Sheet 34 Question 1
Suspense account
Balance b/d 39 M Lacey
..A Baynes
General Journal
39
M Lacey Dr
M Lacey account
Suspense
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Suspense
39
39
39
Being correction of failure to
post to creditors account
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Homework
For next Lesson
From worksheet 33 do questions 5 and 6
From worksheet 34 do questions 2 and 3
please, always stick the question into your book
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Summary
EXPLAIN TO YOUR PARTNER
1. Name and explain the 6 types of error that
do not prevent the TB from agreeing
2. What is the purpose of a suspense account
3. Why are accountants only happy when the
suspense account has been cleared?
Please complete the lesson evaluation form ..your
constructive feedback is greatly valued
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15