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
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
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.
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
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