Correction Of Errors
Overview
Some errors politely announce themselves: the trial balance refuses to balance, and a temporary suspense account is opened to hold the difference until the mistake is found. Other errors are silent: the trial balance balances perfectly while the accounts underneath are still wrong. Both kinds have to be found and corrected through the journal.
In this lesson you will learn to tell the two kinds of error apart, correct each one with a journal entry, and prepare a suspense account that closes to zero once every correction has been posted.
Objectives
- Identify and explain errors that do and do not affect the balancing of the trial balance
- Prepare journal entries to correct errors
- Prepare a suspense account
Lesson Note
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Lesson Evaluation
Congratulations on completing the lesson on Correction Of Errors. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.
You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.
Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.
- A trader debits a van purchase to motor expenses instead of motor vehicles. What type of error is this? A) Error of omission B) Error of principle C) Compensating error D) Error of commission Answer: B
- Which of these errors would cause a trial balance to fail to balance? A) Complete reversal of entries B) A compensating error C) A payment posted to the bank account but never posted to the expense account D) An error of principle Answer: C
- A suspense account has an opening debit balance of $400. A correction posts a $400 credit to suspense. What is the resulting balance? A) $800 debit B) $0 C) $400 credit D) $400 debit Answer: B
- A transaction is posted to the correct accounts but with the debit and credit on the wrong sides. To correct this, the journal entry must use: A) Half the original amount B) The original amount C) Double the original amount D) No suspense account is ever needed for this error Answer: C
- Which error occurs when a transaction is left out of the books completely? A) Error of commission B) Error of omission C) Error of original entry D) Compensating error Answer: B
Available on the Green Bridge App
Download the Green Bridge CBT app on your phone or computer to access full lesson notes, practice questions, and more.
Available on the Green Bridge App
Download the Green Bridge CBT app on your phone or computer to access full lesson notes, practice questions, and more.
Recommended Books
Practice Mock Questions
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