Overcoming Errors. We need to be accurate all the time. Owners, bankers, investors, employees, and tax authorities rely on accurate information. ERRORS.

Slides:

Advertisements

Similar presentations

Posting Journal Entries to General Ledger Accounts

Advertisements

Home.

Accounting for a Service Business Unit 1.8 The Ledger.

Learning Objectives After studying this chapter, you should be able to: Use double-entry accounting. Analyze and journalize transactions. Post journal.

Posting Journal Entries Chapter 7 Accounting Jeopardy By Paul K. & Chris R. Mr. Lyman’s Class © January 2003.

Chapter 7 Posting Journal Entries to General Ledger Accounts

First exercise of the day to start a new chapter in Mrs. Cleary’s accounting class. Complete the following: 1.) Write your name on a sheet of paper. 2.)

The Accounting Cycle As we have learned, accounting is a systematic process of recording the financial transactions of a business and arranging the subsequent.

Accounting I.  Proving the Ledger  Trial Balance  Transposition Error  Slide Error  Correcting Entry.

Chapter 8 $ The Work Sheet $ $ $.

CHAPTER FIVE The Trial Balance McGraw-Hill/Irwin Accounting Fundamentals, 7/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved Prepare.

Accounting 211 – Chapter 2 The Recording Process

Trial Balance A trial balance is a list of all the nominal ledger (general ledger) accounts contained in the ledger of a business. The profit and loss.

COMPLETION OF THE ACCOUNTING CYCLE - Closing Entries -

Finding and Correcting Errors on a Work Sheet Chapter 6, Section 4.

LESSON 6-3 Extending Financial Statement Information on a Work Sheet.

BAF3M Accounting Chapter 7 – Posting.

A Worksheet For a service business

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Setting Up the General Ledger The General LedgerSection 7.1 Accounts.

Week 4.  Contains a chronological list of transactions all in one place.  Does not tell business owner what the account balances are for each account.

Accounting Bellwork 3 rd Hour: What goes in the post reference column of the following: 1.General ledger 2.General journal 3.General ledger with a balance.

Chapter 7 Quiz will be on next Tuesday Nov 4..  Opening an Account ◦ Let’s say that account number for your Asset accounts are: ◦ Bank 101 ◦ Bookkeeping.

@ 2012, Cengage Learning Analyzing Transactions LO 4b – Discovery and Correction of Errors.

0 Glencoe Accounting Unit 2 Chapter 7 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Unit 2 The Basic Accounting Cycle Chapter 3 Business.

Chapter 7 Quiz on next Tuesday Nov 3.  Let’s review how trial balance is made: 1. Journal entry is made in journal. Debit amount and Credit amount must.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 6-4 Finding and Correcting Errors on the Work Sheet.

A WORKSHEET FOR A SERVICE BUSINESS Accounting – Chapter 6.

CHAPTER 6 TRIAL BALANCE. Form of Trial Balance TRIAL BALANCE  The variance between debit side and credit side is called the balance  Once the balances.

CDA COLLEGE ACC101: INTRODUCTION TO ACCOUNTING Lecture 5 Lecture 5 Lecturer: Kleanthis Zisimos.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 6-4 Finding and Correcting Errors on the Work Sheet.

Recording and Adjusting Closing Entries. 2LESSON 8-1 ADJUSTING ENTRY FOR SUPPLIES 1 2 page Write the title of the account credited. Record the.

NORTHERN SECONDARY SCHOOL 1 Chapter 7 Posting. NORTHERN SECONDARY SCHOOL 2 Accounting Cycle So Far.

Chapter 7.2 – Trial Balance out of Balance

By Myrna Kopeechuk. Intended Audience Adult Learners who are: Adult Learners who are: Students of Basic Accounting Theory Course at the University College.

Accounting Theory.  Matching expenses with revenue ◦ Recording revenue from business activities and expenses associated with earning that revenue in.

Section 3Preparing a Trial Balance What You’ll Learn  The purpose of a trial balance.  How to prepare a trial balance.  How to identify and locate trial.

MILLIONAIRE SCOREBOARD $100 $200 $300 $500 $1,000 $2,000 $4,000 $8,000 $16,000 $32,000 $64,000 $125,000 $250,000 $500,000 $1 MILLION Click the $ for.

Unit #7 –Posting to the Ledger

Section 3Completing the Work Sheet and Journalizing and Posting the Adjusting Entries What You’ll Learn  How to complete the Adjusted Trial Balance section.

Posting Journal Entries to General Ledger Accounts

PowerPoint® Slides to accompany Basic Bookkeeping, Seventh Edition Prepared by JD Chazan CPA, CA National Taiwan University 3-1 Copyright © 2015 by Nelson.

POSTING JOURNAL ENTRIES TO GENERAL LEDGER ACCOUNTS Chapter 7.

GLENCOE / McGraw-Hill. The General Journal and the General Ledger.

 Many different parties rely on the information produced by accounting systems  There needs to be a high degree of accuracy  Any errors must be discovered.

Sec 8.2 Adjusting Entries and the Worksheet. The worksheet  Accountants may need an overview of the year- end account balances and a tool to plan the.

Accounting Cycle.

0 Glencoe Accounting Unit 2 Chapter 7 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 7, Section 3 Preparing a Trial Balance.

BAF3M1 POSTING Chapter 7, Section 7.1. Recall:  We used T-accounts to emphasize accounting theory  Accountants use the General Journal to record transactions.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 6-4 Finding and Correcting Errors on the Work Sheet.

Chapter 7, Section 1 Posting Journal Entries to General Ledger Accounts.

Overcoming Errors.

The Journal and the Ledger

Completing the Accounting Cycle

The general journal is a permanent record organized by account number

$ $ $ $ Section 3 Preparing a Trial Balance What You’ll Learn

Accounting cycle Made by: Yashvi Shah.

Posting Journal Entries to General Ledger Accounts

Overcoming Errors.

Lesson 26-4 ADJUSTING ENTRIES Lesson 26-4, page 675.

© 2014 Cengage Learning. All Rights Reserved.

$ $ $ $ Section 3 Preparing a Trial Balance What You’ll Learn

LESSON 6-1 Creating a Worksheet

The General Ledger Setting Up the General Ledger

LESSON 6-1 Creating a Worksheet

LESSON 6-1 Creating a Worksheet

Finding and Correcting Errors on the Work Sheet

Overcoming Errors.

The Six-Column Work Sheet

LESSON 6-1 Creating a Worksheet

Presentation transcript:

Overcoming Errors

We need to be accurate all the time. Owners, bankers, investors, employees, and tax authorities rely on accurate information. ERRORS SHOULD NOT HAPPEN…but they do. So we have to find them and correct them when we do.

Correcting Errors in the Books Accounting has traditionally been done in pen. Still…if mistakes were made, it was not a good idea to erase or use white-out. Why do you think this is? Even software does not cover it up.

Errors Found Immediately If we find an error right away, we STROKE through the incorrect numbers or letters and write the correction above.

Errors Found Later Sometimes, our accountants only learn about errors after time has passed. A lot of the time, we create a new accounting entry. So lets imagine that on July 5, our accountant noticed that an invoice for $752 had been debited to the wrong account. The invoice was for supplies, but had been debited to the Equipment account. The error was made on January 17.

Errors Found Later To fix this, we need to use a correcting journal entry. These cancel the effect of the error. The $752 in the Equipment Account needs to be cancelled and shifted to Supplies.

Trial Balance Out of Balance So we know that information moves from a source document to a trial balance. 1. Equal debit and credit amounts are recorded in a journal entry. 2. Debit and credit journal amounts are posted to the proper columns in the ledger accounts. 3. New ledger account balances are calculated every time journal amounts are posted. 4. Final balances of each ledger account are identified as either debit or credit. Then transferred to the Trial Balance. 5. The totals of the two columns of the trial balance are calculated. If the totals are the same, things are in balance. These are then used for the income statements and balance sheet.

Trial Balance out of Balance If there is just ONE mistake when we put the information into their places, trial balances will not equal. This means we cannot prepare financial statements. WE HAVE TO FIND IT!!

Quick Tests for Detecting a Single Error There are 4 tests to figure out an error quickly. WE WANT ZERO DIFFERENCE. 1. If the difference is a multiple of 10 (10 cents, 1 dollar, etc) an addition error is probably to blame. Try adding again. 2. Check the ledger and journal to see if the difference is equal to an amount entered in the ledger or journal. If you find one, check to see it has been placed properly.

Quick Tests for Detecting a Single Error 3. Divide the difference by two. Search the trial balance and ledger accounts for the divided amount. If you find one, check it. You may have posted a debit as a credit, or a credit as a debit.

Quick Tests for Detecting a Single Error 4. If the difference is a multiple of 9, we probably made a transposition error or a decimal point error. A transposition error means we mixed the order of digits. The difference will always be a multiple of 9. A decimal point error is when we put the decimal in the wrong place. $1.19 being entered as $ ( = which, divided by 9 equals

Multiple of 9 Errors The number of digits in the trial balance difference may help you save time looking for the error. For example, if the difference between debit and credit totals is a multiple of 9 and has two digits – like 54 – then digits in the “tens” could have been switched (like 5693 to 5639). If the difference has four digits – for example, 4500 – look for numbers in the “thousands” that could have been transposed (like 9438 to 4938).