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WHAT DO I DO IF I MADE A CARELESS MISTAKE IN MY MATHS PROBLEM SUM?
WHAT DOES MY TEACHER DO WHEN HE MARKS A QUESTION WRONGLY?
WHAT DOES THE CASHIER DO IF SHE GIVES METHE WRONG CHANGE?
WHAT DOES THE UNCLE AT THE GROCERY SHOP DO WHENHE ADDS UP WRONGLY FOR MY GROCERIES?
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1. EXPLAIN & CORRECT ERRORS WHICH DO NOT AFFECT
THE AGREEMENT OF THE TRIAL BALANCE TOTALS.
2. EXPLAIN AND CORRECT ERRORS WHICH AFFECT
THE AGREEMENT OF THE TRAIL BALANCE TOTALSBY USING A SUSPENSE ACCOUNT.
3. RE-CALCULATE PROFITS AFTER ERRORS HAVE BEEN
CORRECTED.
4. REVISE THE BALANCE SHEETS TO RECTIFY THE ERRORS.
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Errors ofomission
Errors of commission
Errors of principle
Errors of original entry
Compensating errors
Completereversal of entries
Errors ofomission of one
entry
Errors in calculations
Errors in amount
Posting to the wrong side of anaccount
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When a transaction has been completely omitted from the books.
By making a double-entry to record the transaction.
Main
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An entry has been posted to the wrong account of the same category.
To reverse the entry in the wrong account and to post the correct entry.
Main
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An entry has been posted to the wrong account of a different category.
To reverse the entry in the wrong account and to post the correct entry.
Main
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A wrong amount is recorded in a book of original entry or a document
such as an invoice and subsequently posted to the ledger accounts.
To correct the difference in the correct and wrong amount accordingly.
Main
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An error on the debit side is compensated by an error of equal amount
on the credit side.
To reverse the error on both debit and credit sides of the accounts
concerned.
Main
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When recording a transaction, the debit and credit entries are reversed.
By making the necessary posting of an amount double the amount of the
original error.
Main
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Forgetting to either debit or credit one side of a transaction.
By making the necessary posting which has been omitted against an
entry in the Suspense Account.
Main
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Mistakes made in calculation.
To account for either the overcast or undercast of figures.
Main
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The amount debited and the amount credited are different.
To account for either the overcast or undercast of figures accordingly.
Main
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Causing one side of the ledger to be more than the other by twice the
value of the error.
To make the necessary adjustments against Suspense Account.
Main
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A cash payment of $2,000 for purchases has been omitted
from the books.
Purchases Account$
Cash Account
$
Cash 2,000
Purchases 2,000Main
Journal entry
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A sale of $1,000 to Carrefour has been posted to Cold Storage -
Causeway Point.
Cold Storage - Causeway Point$ $
Sales 1,000
Carrefour
$
ERROR MADE
CORRECTION MADE
Carrefour 1,000
Cold Storage - 1,000
Causeway Point
Main
Journal entry
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Repairs to vehicles amounting to $3,000 has been posted to
Vehicles Account.
Vehicles Account$ $
Cash 3,000
Repairs Account
$
ERROR MADE
CORRECTION MADE
Repairs 3,000
Vehicles 3,000
Main
Journal entry
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A purchase of $2,100 from Pokka Corporation Limited by
Carrefour has been entered in the Purchases Journal and posted
to the ledger as $2,010.
Purchases Account$
Pokka Corporation Limited 2,010
Pokka Corporation Limited
$
Purchases 2,010
ERROR MADE
CORRECTION MADE
Pokka Corporation Limited 90
Purchases 90
Main
Journal entry
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$ $
$ $
ERROR MADE
CORRECTION MADE
Wages 10
Rent received 10
Main
Rent received $340 is correctly debited to the Cash Account but
posted as $350 to Rent Revenue Account. Similarly, wages pai
a sum of $590, is correctly credited to the Cash Account but
posted as $600 to Wages Account.Rent Revenue Account
Wages Account
Cash 350
Cash 600Journal entry
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$ $
$ $
ERROR MADE
CORRECTION MADE
Carrefour 700
Cash 700
Main
A payment of $700 to a creditor, Carrefour, should be debited
to Carrefours account and credited to the Cash Account, but
the entries are reversed.
Cash Account
Carrefour
Carrefour 1,400
Cash 1,400Journal entry
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A cash payment of $2,000 for purchases has been omitted
from the Purchases Account.
Purchases$ $
Cash 2,000
Suspense Account
$ $
Purchases 2,000
CORRECTION MADE
Main
Journal entry
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A purchase of $2,100 from Pokka Corporation Limited by
Carrefour has been entered in the Purchases Journal as $2,010.
The amount shown on the other account is correct.
Purchases
$ $
Suspense 90
Suspense Account
$ $
Purchases 90
CORRECTION MADE
Main
Journal entry
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Rates paid $210 was entered correctly in the Cash Book but
wrongly entered as $120 in the Rates Account.
Rates Account$ $
Suspense 90
Suspense Account
$ $
Rates Account 90
CORRECTION MADE
Main
Journal entry
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Discount received $100 posted to the debit side of the Discount
Received Account.
Suspense Account$ $
Discount Received 200
Discount Received Account
$ $
Suspense Account 200
CORRECTION MADE
Main
Journal entry
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P.S. The suspense account would be self-balancing when all the errors
made are detected and corrected, otherwise, it would either have a
credit or debit balance when closed!
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Correcting Net Profit Figure Errors made in the accounts
would affect the figures in our final accounts.
Errors that affect the Gross Profit and Net Profit figures
are items that are transferred to the Trading and Profit
and Loss Accounts ultimately.
E.g. Sales, Rent, Commission Received etc.
Errors of items found in the Balance Sheet will not affect
the profit figure, instead, they will overstate or
understate the assets and liabilities figures.E.g. Furniture, motor vehicles, loan, bank overdraft etc.
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Statement of Corrected Net Profit
$ $
Net Profit before COE 1,700
Add Expenses overcast XX
Revenue undercast XX
XXXX
Less Expense undercast XX
Revenue overcast XX
XXAdjusted Net Profit XX
Note: Overcast means showing more than there actually is
Undercast means showing less than there actually is
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