level: Correction of Errors
Questions and Answers List
level questions: Correction of Errors
| Question | Answer |
|---|---|
| What is an error of 'principle'? | When an accounting entry breaks an accounting principle or concept. |
| What is an error of transposition? | "When two digits in an amount are accidentally recorded the wrong way round." |
| What types of errors can be detected by the Trial Balance? | Errors of : - Transposition - Omission (one sided) - Commission (one sided or two of the same type, eg both debits) |
| What statement must be created when errors are corrected? | Statement of Adjustments to Profit/Loss |
| What types of errors will allow the trial balance to still balance? | Errors of: - Omission - Commission - Principle - Compensation - Original entry - Reversal |
| What are the steps to correcting errors? | 1) What should the double entry have been? 2) What did the double entry in error do? 3) Therefore, What should the correction be? |