Chapter 11 Control Systems: Errors and Suspense accounts

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Chapter 11Control Systems Errors and
Suspense accounts
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Errors that have no effect on the trial balance
totals include

• Errors of omission
• Compensating errors
• Errors of commission
• Errors of complete reversal
• Errors of principle
• Errors of original entry
• Transposition errors

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A Brief Description of Each Error

• Errors of omission
• Absolutely no entry was made in the ledger.
• Compensating errors
• Errors that cancel each other.
• Errors of commission
• Entries are made on the correct sides but in the
  wrong personal accounts.

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A Brief Description of Each Error

• Errors of complete reversal
• Entries made in the correct accounts but each
  item is recorded on the incorrect side.
• Errors of principle
• Correct amounts recorded in the wrong class of
  accounts.

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A Brief Description of Each Error

• Errors of original entry
• The incorrect amount was recorded on the correct
  sides of each account.
• Transposition errors
• The digits for the transaction amounts are
  rearranged.

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Errors that have no effect on the trial balance
totals include

• Worked Example
• Show the journal entries to correct the
  following errors. Make all adjustments on 31 Dec.
  2009
• (a) The purchase of a van on credit from Van Plus
  Ltd. for 143 900 had been completely omitted
  from the records.
• (b) The sales journal and the purchases journal
  were each over-added by 2 200.

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Errors that have no effect on the trial balance
totals include

• Worked Example
• (c) A credit purchase of goods from R. Francis
  for 500 was entered in B. Francis account.
• (d) An electricity payment by cheque 75 was
  entered on the receipts side of the bank account
  and the wrong side of the electricity account.

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Errors that have no effect on the trial balance
totals include

• Worked Example
• (e) Rental income of 7520 had been entered in
  the sales account.
• (f) A sale of goods for 900 to S. Angel was
  entered in the ledgers, both on the credit and
  debit sides, as 600.
• (g) A cheque payment to J. Mark for 9731 was
  entered in the accounts as 1397.

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Errors that have no effect on the trial balance
totals include

• Solution to Worked Example

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Errors that have no effect on the trial balance
totals

• Solution to Worked Example

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Errors that have no effect on the trial balance
totals

• Solution to Worked Example

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Errors that have no effect on the trial balance
totals include

• These errors will cause the trial balance totals
  to disagree resulting in one side being larger
  than the other. When the trial balance totals do
  not agree a suspense account is created as a
  temporary means of getting the totals to be the
  same. The difference is normally caused by
  several errors. Each error must be corrected with
  the aid of a suspense account.