The types of errors that are not revealed by the trial balance Essay Example For Students

The types of errors that are not revealed by the trial balance Essay 6. Briefly describe the types of mistakes that NOT revealed by the test balance. For each type of mistake, show the consequence of rectifying the mistake in expanded accounting equation. Please provide illustration in explicating your replies. Trial balance is a list of all the leger history balances. It is usually prepared at the terminal of the accounting period to enable us to fix the fiscal statements of the concern. The balances of all legers are put into debit and recognition columns. The general ground of fixing a test balance is to prove the truth of the leger by demoing whether entire debits equal to credits. In order to corroborate that dual entry has taken topographic point for each dealing, the entire debit entries must be equal to entire recognition entries. Example of test balance are shown at below: We will write a custom essay on The types of errors that are not revealed by the trial balance specifically for you for only $16.38 $13.9/page Order now Company ABC Trial Balance as at 31 December 2014 Particulars Debit ( RM ) Recognition ( RM ) Cash 12000 Office equipment 5000 Debtor 550 Creditor 2700 Purchase 4000 Drawings 400 Rental 1200 Wagess 2400 General disbursals 375 Bank 7500 Gross saless 9000 Gross saless returns 100 Avant-garde 4500 Purchases returns 500 Capital 25825 Entire 38025 38025 There are two type of mistakes normally found in the procedure of fixing fiscal statement, which are mistakes that revealed by the test balance and mistakes that are non revealed by the test balance. In this assignment, we merely discuss the mistakes that are non revealed by the test balance. Mistake of skip a dealing that is wholly non entered in the books at all. Example: Buy a motor new wave by hard currency for RM 70000 concern usage. This dealing was non recorded in the books. Cash RM Motor new wave ( Correction ) 70000 Motor Van RM Cash ( Correction ) 70000 Since the dealing was wholly omitted from the books, the lone manner to do the rectification is by entering the dealing in the books utilizing the dual entry regulations. Hence, the plus, motor new wave is increase RM 70000 and another plus hard currency lessening RM 70000. Mistake of rule a dealing that is entered in incorrect class of history. Example: A amount of RM 700 paid for fixs of machinery was wrongly debited into the machinery history. Machinery History RM RM Cash ( Wrong entry ) 700 Repairs ( Correction ) 700 Repairs Account RM Machinery ( Correction ) 700 Machinery is an plus to the concern whereas fixs of machinery categorize as disbursals. Even though the dual entry for an addition in both history is debited to the several histories, but they are different classs. The mistakes is corrected by crediting the machinery history. The consequence of this mistake is to call off the mistake and the fixs history is debited to demo the right entry. Mistake of committee the entries are made at the right sum and appropriate side but to the incorrect history of the right class. Under this type of mistake, the dual entry regulation is followed right. Example: A sale of goods deserving RM 5000 to Mr Rex was wrongly entered into Mr Tex history due to a error. Mr Rex Account RM Mr Tex ( Correction ) 5000 Mr Tex Account RM RM Sale ( Wrong entry ) 5000 Mr Rex ( Correction ) 5000 Mr Rex and Mr Tex are both personal histories of the same class. Mr Tex history is credited RM 5000 to call off off the mistake and Mr Rex history is debited RM 5000 to demo the right entry. Mistake of original entry the original sum was wrongly entered in the books of original entry ( or book premier entry ) and the incorrect sum was right posted to the leger utilizing the double-entry system. .ub88f9566d3b1dfbc04bdccb3eccc5139 , .ub88f9566d3b1dfbc04bdccb3eccc5139 .postImageUrl , .ub88f9566d3b1dfbc04bdccb3eccc5139 .centered-text-area { min-height: 80px; position: relative; } .ub88f9566d3b1dfbc04bdccb3eccc5139 , .ub88f9566d3b1dfbc04bdccb3eccc5139:hover , .ub88f9566d3b1dfbc04bdccb3eccc5139:visited , .ub88f9566d3b1dfbc04bdccb3eccc5139:active { border:0!important; } .ub88f9566d3b1dfbc04bdccb3eccc5139 .clearfix:after { content: ""; display: table; clear: both; } .ub88f9566d3b1dfbc04bdccb3eccc5139 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .ub88f9566d3b1dfbc04bdccb3eccc5139:active , .ub88f9566d3b1dfbc04bdccb3eccc5139:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .ub88f9566d3b1dfbc04bdccb3eccc5139 .centered-text-area { width: 100%; position: relative ; } .ub88f9566d3b1dfbc04bdccb3eccc5139 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .ub88f9566d3b1dfbc04bdccb3eccc5139 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .ub88f9566d3b1dfbc04bdccb3eccc5139 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .ub88f9566d3b1dfbc04bdccb3eccc5139:hover .ctaButton { background-color: #34495E!important; } .ub88f9566d3b1dfbc04bdccb3eccc5139 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .ub88f9566d3b1dfbc04bdccb3eccc5139 .ub88f9566d3b1dfbc04bdccb3eccc5139-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .ub88f9566d3b1dfbc04bdccb3eccc5139:after { content: ""; display: block; clear: both; } READ: Hackers EssayExample: Purchase of goods cost RM 920 from Mei Mei Enterprise were wrongly recorded in the Purchases Journal as RM 902. The incorrect sum was posted to the leger. Purchases RM Mei Mei Enterprise 902 Mei Mei Enterprise ( Correction ) 18 920 Mei Mei Enterprise RM Purchases 902 Purchases ( Correction ) 18 920 Initially, the two histories were recorded utilizing an wrong figure where both histories were understate by RM 18. This mistake is corrected by adding back the understate sum. Mistake of reversal of entries dealing are entered in the histories utilizing the double-entry system but they are entered in complete reversal. An history that should be debited is credited and frailty versa. Example: A check received from a debitor, Sin Keat, entire sum of RM 3000 was wrongly credited to the bank history and debited to Sin Keat’s history. Sin Keat RM RM Bank ( Wrong entry ) 3000 Bank ( Correction ) 6000 Bank RM RM Sin Keat ( Correction ) 6000 Sin Keat ( Wrong entry ) 3000 In rectifying this type of mistake, the sum involved should be doubled, that is RM 3000 x 2. The first RM 3000 is to call off the mistake and the 2nd RM 3000 is to bespeak the right entry. Therefore, the plus, bank addition RM 3000 while another plus, debitor lessening RM 3000.