Presentation on theme: "07/04/2015Paul Copeland1 Lesson 59 Correction of Errors Accounting."— Presentation transcript:
07/04/2015Paul Copeland1 Lesson 59 Correction of Errors Accounting
07/04/2015Paul Copeland2 By the end of this Lesson You will 1. Mark the homework..Sheet 33 Q’s 2 & 3 2. Learn how to correct errors (6 types) that do not prevent the trial balance from agreeing
07/04/2015Paul Copeland3 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!
07/04/2015Paul Copeland4 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! 3 Stage Method 1Show the entries that have been done 2Identify the mistake 3Correct the mistake with a double entry Together we will work through the H Sagrott question
07/04/2015Paul Copeland5 Business of K Sagrott…(a) Bank D McDuff 28 D McNab Bank 28D McDuff 28 D McDuff D McNab 28 General Journal D McDuff Dr 28 D McNab 28 Being correction of error of commission Working …you can abbreviate Answer
07/04/2015Paul Copeland6 Business of K Sagrott…(b) Bank Office furniture 65 Office Expenses Bank 65Off furniture 65 Office furniture Office Expenses 65 General Journal Office furniture Dr 65 Office expenses 65 Being correction of error of principle
07/04/2015Paul Copeland7 Business of H Sagrott…(c) Discount Received Sundries 10 Discount Allowed Discount All 10 Disc Rec 10 General Journal Discount allow Dr 10 Discount received 10 Being correction of error of commission
07/04/2015Paul Copeland8 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.OmissionComplete double entry totally missed out
07/04/2015Paul Copeland9 Question 3 A Smythe Save time by abbreviating on working accounts General Journal M Ltd Purch M Ltd 1 600 Purch 1 600 M Ltd 1 600 Pch 1 600 Jn 30 Machinery Ltd 1600 Purchases 1600 Being correction of error of principle Bank D Gor ? Bank ? Dis Rec D Gor 7-50 DR 7-50 D Rec 7-50 D Gor7-50 Jn 30 Disc Rec 7-50 D Gorrie 7-50 Being correction of discount disallowed Dep on M Ma 80 Fittings Dep 80M 80 Machinery Fit 80 Jn 30 Fittings 80 Machinery 80 Being correction of error of commission
07/04/2015Paul Copeland10 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! 3 Stage Method 1Show the entries that have been done 2Identify the mistake 3Correct the mistake with a double entry You should be able to do Q4 inside 10 minutes..without cutting corners!
07/04/2015Paul Copeland11 Big Picture on Correction of Errors Remember the 2 parts Errors that do prevent the trial balance totals from agreeing Errors that have NO EFFECT on the agreement of the trial balance So We will now move on to Done this one
07/04/2015Paul Copeland12 If the Trial Balance does not agree Make the trial balance agree by creating a suspense account Trial Balance of D Beckham at 30 April 2001 DrCr Capital 20 Sales 30 Purchases 80 Rent 6 Premises 14 100 Suspense 50 Suspense Account Bal b/d 50 In the first few days of May the error was found (Purchases Day Book was overcast by £50) So if PDB was too big by £50 this bigger figure would have been posted to Purchases Account Crediting Purchases Account with £50 will correct purchases and debiting suspense with £50 will clear the suspense Purchases 50
07/04/2015Paul Copeland13 Sheet 34 Question 1..A Baynes SuspenseSuspense account Balance b/d 39 M Lacey account Suspense 39 M Lacey 39 General Journal M Lacey Dr 39 Suspense39 Being correction of failure to post to creditors account
07/04/2015Paul Copeland14 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
07/04/2015Paul Copeland15 Summary E X P L A I N T O Y O U R P A R T N E R 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