Correction of Errors

Question 1

What does correction of errors mean?

Accepted Answer

Fixing wrong entries in the accounting records — Correction of errors is the process of fixing wrong entries in the accounting records.

Question 2

Which error does not affect the trial balance?

Accepted Answer

Error of principle — An error of principle keeps both debit and credit amounts correct in total, so the trial balance still balances.

Question 3

The account used to hold the difference in a trial balance temporarily is the

Accepted Answer

suspense account — The suspense account holds the debit/credit difference until the errors are found and corrected.

Question 4

A payment to creditor Ali was posted to creditor Aliff's account by mistake. This is an error of

Accepted Answer

commission — The entry went to the right type of account but the wrong person — an error of commission; the trial balance is unaffected.

Question 5

Purchase of an asset (a vehicle) was recorded in the Motor Expenses account. This is an error of

Accepted Answer

principle — The item went into the wrong class of account (expense instead of asset) — an error of principle.

Question 6

The purchases book and the sales book are both overcast by RM100. The net effect on the trial balance is

Accepted Answer

nil; the errors compensate each other — Two equal errors on opposite sides cancel out, so the trial balance still balances — compensating errors.

Question 7

The book used to record the correction of errors is the

Accepted Answer

general journal — All correcting entries are recorded through the general journal because they are not ordinary transactions.

Question 8

Discount received of RM70 was omitted from the Discount Received account only. The correction is

Accepted Answer

Dr Suspense RM70; Cr Discount Received RM70 — Discount received is income (credit). To complete its credit: Dr Suspense RM70, Cr Discount Received RM70.

Question 9

If an error can be corrected without a suspense account, it means the error

Accepted Answer

did not affect the trial balance — A two-sided correction (debit and credit) does not involve the suspense account, so the trial balance was not affected.

Question 10

After all errors that affected the trial balance are corrected, the suspense account balance should be

Accepted Answer

zero (cleared) — Once every one-sided error is corrected, the suspense account becomes zero and is closed.

Dr Ahmad's account	RM200
Cr Ahmadi's account		RM200

Two Types of Errors

The Suspense Account

A Worked Correction

Journal Narration