1. Errors and the Trial Balance The Suspense Account
Basic Accounting II
Errors and the Trial Balance
The Suspense Account

2. Trial Balance Re-Cap In pairs solve the Trial balance
Remember the debit and credit sides need to be equal
Use the DEAD CLIC rule!

3. As we know a trial balance should always balance!
Discuss with a partner reasons WHY the trial balance may not balance.
Try to think of at least 3 examples

4. Errors leading to an imbalance in the Trial Balance
Single Entry
If only one side of the entry has been made in the Main ledger e.g. a cash sale for £50 has been entered into the DR side of the cash book but no entry made in Sales account.
Transposition Error
The digits in a figure are transposed or (swapped) e.g Rent for £438 has been entered as CR cash book £438 DR Rent £483

5. Errors leading to an imbalance in the Trial Balance
Balancing Error
If a ledger balance has been calculated incorrectly and then transferred onto the trial balance
Omission
If a balance of a ledger account is omitted from the trial balance
Transfer
Ledger balances are incorrectly transferred to the Trial Balance

6. Errors which do NOT cause an imbalance in the Trial Balance
Error of Original Entry
Both entries in the main ledger have been made using the wrong amount
Error of Omission
Entry is completely omitted from the ledger accounts
Error of Reversal
The amount is correct but have been posted on the wrong sides of both accounts

7. Errors which do NOT cause an imbalance in the Trial Balance
Error of Commission
The double entry amount is correct but has been posted to the wrong account of the same type of account e.g. £50 Telephone has been entered as Cr Cash Book Dr Electricity.
Error of Principle
Similar to an error of commission where the amount is correct but the entry has been posted to the wrong type of account e.g computer paper posted to computer fixed asset account.

8. Activity Individually
Thinking of the different types of errors decide whether the error Would or Would NOT cause the trial balance to be imbalanced.

9. Using the Suspense Account
Sometimes the trial balance will not balance
When this happens the introduction of a Suspense account is used
The suspense account is a temporary measure
It is to be cleared once the errors are found

10. How it works A Suspense account balance is entered so that it does.
The trial balance is balance and does not add up! £ £ Total 109, ,444
A Suspense account balance is entered so that it does.
£ £
Suspense
Total 109, ,444

11. Suspense account
The figure is entered into the suspense account on the side it has been entered in the TB
Suspense Account
Opening Bal 100

12. Clearing the suspense account
It has been discovered that cash purchases of £100 were correctly entered into the cash account but no entry was made in the purchases account.
A journal is needed to correct the error
Dr Cr
Purchases
Suspense

13. Suspense account The aim is always to clear the suspense account
The figure can now be entered into the suspense account now the error has been found
The aim is always to clear the suspense account
Suspense Account
Opening Bal 100
Purchases 100

14. Lets work together Complete assessment task 1.4 PA1
Complete assessment task 1.3 PA2 on your own or with a partner

15. Assessment style question
You will be given a trial balance which does NOT balance
Step 1 – Draft the trial balance (in pencil)
Step 2 – Look at the journal entries that are provided in the question
Step 3 – Re- Draft the Trial balance to reflect the changes - it should now balance

16. Journal entries
The journal is a book of PRIME ENTRY Just like the trial balance they must balance They are an instruction to what needs to be posted to the main ledger They have the name of the account and whether it will be a debit or a credit

17. Extension Activity
I have put a challenging extension activity on the VLE for you to access if you would like to develop your knowledge.

18. Exam Preparation Log onto your AAT account
We will work through the first exam scenario