Page 192 - DCOM101_FINANCIAL_ACCOUNTING_I

Financial Accounting-I

Notes 14.4 Summary

z Accounting errors are the errors committed by persons responsible for recording and
maintaining accounts of a business firm in the course of accounting process.

z Errors can be in the form of omission of recording of transaction in various books or posting
in ledger or mistake in totalling or recording wrong amount or in wrong account.
z There can be accounting errors which affect the agreement of trial balance and errors which
do not affect the agreement of Trial Balance.

14.5 Keywords

Journal: The primary book in which the business transactions are recorded at fi rst time.
Ledger: It is the classification of accounts in which various accounts are maintained.

Subsidiary book: It is a book maintained for routine transactions of the enterprise.
Suspense account: Sometimes, it is not possible to point out errors easily, then the difference is
put to an account, known as suspense account.

14.6 Self Assessment

Fill in the blanks:
1. If the total of the debit side of the Trial Balance is more than the total of its credit side, the
difference amount will be written in ............................. on its credit side.
2. Opening of a Suspense Account is a .............................
3. One sided errors are corrected through ..................................
4. The process of ............................ starts with understanding the mistakes and their
ramifi cations.
5. Error which affects two different accounts on the same sides or different sides is called .....
.................................................

6. Suspense A/c is shown in the.......................................
7. The balances of all the assets accounts and drawing accounts are recorded in the
……………….of the Trial Balance.

State whether the following statements are true or false:
8. If the Purchases Day Book is undercasted by ` 100 then the error will affects only one
account.
9. Suspense A/c is a summarised account of errors.

10. So one sided errors can not be corrected through Suspense A/c.
14.7 Review Questions

1. Give the journal entries necessary to rectify the following errors:
(i) A payment of ` 450 for purchase of a Typewriter for offi ce use has been debited to
Purchases a/c.

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