@ 2012, cengage learning analyzing transactions lo 4b – discovery and correction of errors
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Trial Balance ErrorsLO 4LO 4
Errors can be made in the accounting system that affect the trial balance.
Errors Causing Unequal Trial Balance
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ErrorsErrors
Trial balance preparation errors
Trial balance preparation errors
Account balance errors
Account balance errors
Posting errorsPosting errors
Column incorrectly addedColumn incorrectly added
Amount incorrectly entered on trial balance
Amount incorrectly entered on trial balance
Balance entered in wrong column or omitted
Balance entered in wrong column or omitted
Balance incorrectly computed
Balance incorrectly computed
Balance entered in wrong column of account
Balance entered in wrong column of account
Wrong amount posted to an account
Wrong amount posted to an account
Debit posted as credit, or vice versa
Debit posted as credit, or vice versa
Debit or credit posting omitted
Debit or credit posting omitted
Tips for Discovering ErrorsLO 4LO 4
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.
Tips for Discovering ErrorsLO 4LO 4
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).
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.
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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.
Discovery of ErrorsLO 4LO 4
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.
Discovery of ErrorsLO 4LO 4
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.
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.
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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.
Errors Not Affecting the Trial Balance
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