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level: Correction of Errors

Questions and Answers List

level questions: Correction of Errors

QuestionAnswer
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?