Verification Of Accounting Records

Book-keeping is done by people, and people miscopy digits, add a column wrongly, post to the account above the one they meant, and occasionally forget an invoice altogether. A set of books that nobody checks is not a record, it is a rumour. So accounting has built into itself four separate ways of testing whether what has been written down can be trusted, and this topic is all four of them.

You will prepare a trial balance and, more importantly, learn precisely what it does and does not prove: six kinds of error can sit inside a trial balance that agrees perfectly. You will build control accounts that check a whole ledger from outside it, prepare a bank reconciliation statement that explains why the bank and the business disagree without either being wrong, correct errors through the general journal and a suspense account, and finish by working out what the corrections do to a profit figure that has already been calculated.