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correction of errors n.
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CORRECTION OF ERRORS

CORRECTION OF ERRORS

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CORRECTION OF ERRORS

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  1. CORRECTION OF ERRORS

  2. An ERROR • is an unintentional mistake. • it is generally discovered months after the cut-off (accounts preparation) date. • it cannot be simply erased [rub out] or torn out when it (the ERROR) has been discovered

  3. ERRORS • must be corrected via the double-entry process • [1st ] The correction is to be recorded in the JOURNAL • [2nd ] The correction is to be posted in the LEDGERS

  4. ERRORS There are TWO types which may occur in the recording of accounting information: • those which DO NOT AFFECT the Trial Balance. • those which DO AFFECT the Trial Balance.

  5. ERRORS WHICH DO NOT AFFECT THE TRIAL BALANCE

  6. Correcting an error that DNATTB • Have the general journal at hand • analyze the mistake that was made • Determine action required to cancel the mistake • correct what is wrong! • Journalize the required action • Add the explanatory narrative

  7. ERRORS WHICH DO AFFECT THE TRIAL BALANCE

  8. The Suspense Account • ERRORS that do affect the trial balance require the services of the Suspense account. • It holds the cancelling half of the transaction, so as to prevent the clerk from changing the part of the posting that was already correct. • It follows the same rules for double-entry posting

  9. EXAMPLES (DNATTB)

  10. EXAMPLES (DATTB)