1. ERROR CORRECTION Error Revealed by the Trial Balance (Trial Balance is not balance)

2. ERROR CORRECTION The possible cause are Arithmetic errors (casting error) Posting errors (eg both are debited) Extraction errors (listed in the wrong side of Trial Balance) Omission of part of an entry Debit and credit sides are entered with different amount

3. ERROR CORRECTION If the error cannot be found until the time to prepare the Financial Statements, a suspense account is raised in order to “balance” the Trial Balance.

4. ERROR CORRECTION Example 1 DT (RM)CR (RM) Assets10,000 Liabilities7,000 Capital2,000 Expenses1,500 Revenues2,000 Total11,50011,000 Suspense Account500 Total11,500

5. ERROR CORRECTION Suspense Account Difference in book 500 Statement of Financial Position Assets10,000Liabilities7,000 Capital2,500 Suspense Ac 500 10,000

6. ERROR CORRECTION Example 2 DT (RM)CR (RM) Assets9,000 Liabilities7,000 Capital2,000 Expenses1,900 Revenues2,000 Total10,90011,000 Suspense Account100 Total11,000

7. ERROR CORRECTION Suspense Account Difference in book 100 Statement of Financial Position Assets9,000Liabilities7,000 Capital2,100 Suspense Ac100 9,100

8. ERROR CORRECTION Once the error has been found, the Suspense Account should be reversed. The entry required depends on the nature of the error Arithmetic Error (casting error) Assets + Expenses = Capital + Liabilities + Revenue If either Asset or Expense is under (over) casted, you need to DT (CR) the account and CR (DT) the Suspense Account

9. ERROR CORRECTION Arithmetic Error Assets + Expenses = Capital + Liabilities + Revenue If Capital, Liabilities or Revenue is under (over) casted, you need to CR (DT) the account and DT (CR) the Suspense Account (page 159 of Roshayani)

10. ERROR CORRECTION Posting Error (both entries are either DT or CR) Example: Payment of salary of RM5,000 was recorded as DT to both Salary and Bank accounts Adjustment: Salary Account = OK, Bank Account need to be CR by RM10,000 – why not RM5,000? DT (RM)CR (RM) Suspense Ac10,000 Bank10,000

11. ERROR CORRECTION Extraction Error (listed in the wrong side of Trial Balance) Example: Accounts Payable of RM2,400 was listed in the debit column of the Trial Balance Suspense account of RM??? was credited Adjustment: Amend the Trial Balance (put the Acc Payable in the credit side) and debit Suspense Account by RM???

12. ERROR CORRECTION Omission of Part of an Entry Example: Payment to Azhar Ent (creditor) of RM1,000 was only credited in the bank account Trial Balance was not balance by how much? Was suspense Account debited or credited?

13. ERROR CORRECTION Omission of Part of an Entry Example: Payment to Azhar Ent (creditor) of RM1,000 was only credited in the bank account Credit balance of Trial Balance will be more by RM1,000 Suspense Account was debited by RM1,000 Adjustment: DT (RM)CR (RM) Azhar Ent1,000 Suspense Account1,000

14. ERROR CORRECTION Debit and credit sides are entered with different amount Cash sales of RM1,030 was correctly debited in the Cash Account but entered as RM1,300 in the Sales Account Amount in which side of Trial Balance is more? What is the amount? The Suspense Account is debited or credited?

15. ERROR CORRECTION Debit and credit sides are entered with different amount Cash sales of RM1,030 was correctly debited in the Cash Account but entered as RM1,300 in the Sales Account Trial Balance: Credit more by 1300-1030: 270 Suspense Account: Debit balance RM270 Adjustment?