Cambridge O level
Accounting
Principles of Accounting
7110
7707
Correction of Errors
Correction of Accounting errors
with Past papers and model papers
by
Sanjaya Jayasundara
Wtzapp: +94712545001
Edexcel IGCSE & O Level
Accounting
Correction of errors
Situations where errors occur
Two types of errors
Trial Balance
Errors which do not affect Trial Balance agreement
Omission, Commission, Original Entry, Principal, Compensation, Complete Reversal, Duplication
Errors which affect the agreement of trial balance
suspense account
All igcse past papers
model questions
Correction of accounting errors for a Level or level under National , Edexcel and Cambridge Syllabuses
Situations where errors take place:
Two types of errors , Errors which are not revealed by the trial balance and errors which are revealed by the trial balance, errors of omission , commission , principle, original entry , compensating and complete reversal , suspense account , past papers
Cambridge O level
National O Level
Edexcel O Level
7707
Prime Entry books
Books of Original Entry
Accounting
Introduction to Accounting
Accounting process
Partnership Accounts
Cambridge IGCSE 7707
Cambridge O Level
Edexcel IGCSE
All the theories, past papers, model questions
you can contact me for further support:
wtsapp : +94 77 903 59 40
Control accounts the account which represents a particular sub ledger, sales ledger and purchases ledger control accounts.
At the end of an accounting period the accounts are balanced off and a trial balance prepared to check the accuracy of the book keeping entries. If a trial balance fails to balance this usually indicates that an error or errors may have been made and needs to be identified. As the business expands the accounting requirements increase which may lead to more errors occurring which are very difficult to find.
Accounting
Cambridge A Level 9706
Financial Accounting
Paper 3
Company Accounts
Public Limited Company Accounts
Cash Flow Statements (IAS 07)
Indirect Method
Operating Activities
Investment Activities
Financing Activities
Online Classes
an effective document for accounting classes specially during this covid 19 (Corona) situation
Past papers and model questions
short notes
online support to get clarified all the doubts
Contact : Wtsapp : +94779035940
Instagram : Sanjaya_Jayasundara
Facebook: Accounting with Sanjaya Sir
Edexcel IGCSE & O Level
Accounting
Correction of errors
Situations where errors occur
Two types of errors
Trial Balance
Errors which do not affect Trial Balance agreement
Omission, Commission, Original Entry, Principal, Compensation, Complete Reversal, Duplication
Errors which affect the agreement of trial balance
suspense account
All igcse past papers
model questions
Correction of accounting errors for a Level or level under National , Edexcel and Cambridge Syllabuses
Situations where errors take place:
Two types of errors , Errors which are not revealed by the trial balance and errors which are revealed by the trial balance, errors of omission , commission , principle, original entry , compensating and complete reversal , suspense account , past papers
Cambridge O level
National O Level
Edexcel O Level
7707
Prime Entry books
Books of Original Entry
Accounting
Introduction to Accounting
Accounting process
Partnership Accounts
Cambridge IGCSE 7707
Cambridge O Level
Edexcel IGCSE
All the theories, past papers, model questions
you can contact me for further support:
wtsapp : +94 77 903 59 40
Control accounts the account which represents a particular sub ledger, sales ledger and purchases ledger control accounts.
At the end of an accounting period the accounts are balanced off and a trial balance prepared to check the accuracy of the book keeping entries. If a trial balance fails to balance this usually indicates that an error or errors may have been made and needs to be identified. As the business expands the accounting requirements increase which may lead to more errors occurring which are very difficult to find.
Accounting
Cambridge A Level 9706
Financial Accounting
Paper 3
Company Accounts
Public Limited Company Accounts
Cash Flow Statements (IAS 07)
Indirect Method
Operating Activities
Investment Activities
Financing Activities
Online Classes
an effective document for accounting classes specially during this covid 19 (Corona) situation
Past papers and model questions
short notes
online support to get clarified all the doubts
Contact : Wtsapp : +94779035940
Instagram : Sanjaya_Jayasundara
Facebook: Accounting with Sanjaya Sir
Standard Costing
Candidates should understand the application of a system of standard costing to an organisation.
Candidates should be able to:
• calculate the following variances:
– direct material price and usage
– direct labour rate and efficiency
– fixed overhead expenditure, capacity, efficiency and volume
– sales price and volume
• reconcile standard cost to actual cost
• reconcile standard profit to actual profit
• explain the causes of the variances and their relationship to each other
• discuss how standard costing can be used as aid to improve the performance of a business
• discuss the advantages and disadvantages of a standard costing system.
TRIAL BALANCE
Concept: A trial balance is a list of accounts and their balances on a given date. Generally a trial balance is prepared at the end of an accounting period to test the mathematical accuracy of books of accounts.
Humans can make unintentional errors, but in Accounting, there is an option to make a Rectification entry for the errors.
Some errors affect the Trial Balance, some not
Rectification of errors depends on the timing of its detection:
1.Errors detected before preparation of Trial Balance are corrected by
"Writing a Narration" for Single Sided Errors &
" Rectified entry for Double Sided Error"
2. Errors detected after Trial Balance : by
" Opening Suspense A/C for Single Sided Errors"
" Rectification Entry"
3. Errors detected in Next accounting period :
Through P&L Adjustment Accounts
Preparation of financial statements for a business which has not maintained proper records(Double Entry records)
Profit Equation method or Converting incomplete records to complete records.
Cambridge A Level
Cambridge O Level
Accounting
9706
Differences between a club and a company
Difference between capital and accumulated fund
Terms used in a club and a profit making business
Differences between the financial statements of a not for profit organisation and a limited company or another profit oriented business like sole trader and partnerships
Reason to capitalize the donations received
Reasons to not to give dividends to members
Differences between the donation and subscription
Subscription calculation using the account or equation
Differences between receipts and payments account and income and expenditure account
All the important theories for a level students under clubs and societies final account
Standard Costing
Candidates should understand the application of a system of standard costing to an organisation.
Candidates should be able to:
• calculate the following variances:
– direct material price and usage
– direct labour rate and efficiency
– fixed overhead expenditure, capacity, efficiency and volume
– sales price and volume
• reconcile standard cost to actual cost
• reconcile standard profit to actual profit
• explain the causes of the variances and their relationship to each other
• discuss how standard costing can be used as aid to improve the performance of a business
• discuss the advantages and disadvantages of a standard costing system.
TRIAL BALANCE
Concept: A trial balance is a list of accounts and their balances on a given date. Generally a trial balance is prepared at the end of an accounting period to test the mathematical accuracy of books of accounts.
Humans can make unintentional errors, but in Accounting, there is an option to make a Rectification entry for the errors.
Some errors affect the Trial Balance, some not
Rectification of errors depends on the timing of its detection:
1.Errors detected before preparation of Trial Balance are corrected by
"Writing a Narration" for Single Sided Errors &
" Rectified entry for Double Sided Error"
2. Errors detected after Trial Balance : by
" Opening Suspense A/C for Single Sided Errors"
" Rectification Entry"
3. Errors detected in Next accounting period :
Through P&L Adjustment Accounts
Preparation of financial statements for a business which has not maintained proper records(Double Entry records)
Profit Equation method or Converting incomplete records to complete records.
Cambridge A Level
Cambridge O Level
Accounting
9706
Differences between a club and a company
Difference between capital and accumulated fund
Terms used in a club and a profit making business
Differences between the financial statements of a not for profit organisation and a limited company or another profit oriented business like sole trader and partnerships
Reason to capitalize the donations received
Reasons to not to give dividends to members
Differences between the donation and subscription
Subscription calculation using the account or equation
Differences between receipts and payments account and income and expenditure account
All the important theories for a level students under clubs and societies final account
make entries in the relevant ledger accounts to record
the:
–– merger of two or more sole traders’ businesses to
form a partnership
–– merger of a sole trader’s business with an existing
partnership to form an enlarged partnership
–– acquisition of a sole trader’s business or partnership
by a limited company
• prepare income statements and statements of financial
position for the newly formed business following the
merger, for example the limited company acquiring the
partnership
• evaluate and discuss the advantages and disadvantages
of the proposed merger.
Advantages or reasons behind the business purchase(acquisition) and merger : Synergy, Vertical integration etc
Purchase consideration
Goodwill
Net Assets
Investment Appraisal: Management Accounting Cambridge A Level Paper 3 last 2 questions: Payback period: Discounted Payback period: Accounting Rate of Return (ARR): Net Present Value (NPV): Internal Rate of Return (IRR) : Sensitivity Analysis: Cambridge A2 Standard Costing Past Papers
Budget : The financial plan for a short period of time: Individual Budgets : Purchases Budget: Production Budget: Sales Budget: Labour Budget: Trade Receivables Budget: Trade Payables Budget: Inventory Budget: Master Budgets: Cash Budget: Budgeted Income Statement : Budgeted Statement of Financial Position: Evaluation of Budgets ( Advantages and Disadvantages of Budget): recognize the effect of limiting factors on the preparation of budgets: prepare a flexed budget statement: entify and explain the causes of differences between actual and flexed budgeted data
• make business decisions and recommendations using supporting data
• discuss the behavioural aspects of budgeting
Standard Costing: Management Accounting Cambridge A Level Paper 3 last 2 questions: Payback period: Discounted Payback period: Accounting Rate of Return (ARR): Net Present Value (NPV): Internal Rate of Return (IRR) : Sensitivity Analysis: Cambridge A2 Standard Costing Past Papers
Activity Based Costing:
The latest costing method in this centaury;
Cost Drivers; Cost Pool; Cost Driver Rates ; All the ABC Cambridge A Level Past paper questions ; ABC Model questions
Introduction.
Discuss the role of the auditor
Discuss the auditor’s basis of opinion
Identify the records that require to be audited
Explain the connection between shareholders, directors and auditors
Understand what is meant by the term ‘true and fair view’
Discuss the role of directors.
Stewardship
Extra readings
Past paper questions.
Model questions.
Summary
Activity-based Costing
Cambridge A2
MA
Paper 03
Activity based costing: defined by CIMA
Cost drivers
Cost driver rate
Cost pools
Stages in using an Activity-Based Costing System
Advantages of Activity-Based Costing System
Dis-advantages/Limitations of Activity-Based Costing System
Working capital cycle
Net working assets to sales/revenue
Income gearing
Gearing ratio
Earnings Per Share (EPS)
Price earnings ratio/(P/E)
Dividend Yield
Dividend cover
Dividend per share
Edexcel Unit 2 - Investment ratios
If you need tute : https://www.slideshare.net/secret/HWzeaKRZChVF33
If you need password please request in comments.
All the best..!
Edexcel Pearson Accounting International Advanced Level
Unit 01: The Accounting System and Costing
Unit 02: Corporate and Management Accounting
Summarized syllabus
Contact for further support
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Understanding User Needs and Satisfying ThemAggregage
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In this webinar, we won't focus on the research methods for discovering user-needs. We will focus on synthesis of the needs we discover, communication and alignment tools, and how we operationalize addressing those needs.
Industry expert Scott Sehlhorst will:
• Introduce a taxonomy for user goals with real world examples
• Present the Onion Diagram, a tool for contextualizing task-level goals
• Illustrate how customer journey maps capture activity-level and task-level goals
• Demonstrate the best approach to selection and prioritization of user-goals to address
• Highlight the crucial benchmarks, observable changes, in ensuring fulfillment of customer needs
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Holger Mueller of Constellation Research shares his key takeaways from SAP's Sapphire confernece, held in Orlando, June 3rd till 5th 2024, in the Orange Convention Center.
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Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
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LEARNING OBJECTIVES
1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
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1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
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3. correction of accounting errors new
1. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 1
Correction of Accounting Errors
Sanjaya Jayasundara
B.Sc.(Finance) Sp.
University of Sri Jayewardenepura,
Investment Advisor,
International School Teacher
071 25 45 001
2. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 2
Content
Introduction.
The situations where accounting errors take place.
Type of accounting errors.
Suspense Account
Statements of revised/corrected profit
Past paper questions.
Model question.
Syllabus according to Cambridge
6.2.3 Correction of errors
• record journal entries supporting the correction of errors
• explain the use of the suspense account as a temporary measure to balance the trial
balance
• open and post entries to a suspense account where necessary
• prepare a statement of revised profit
• prepare revised extracts of statements of financial position
3. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 3
Introduction.
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The situation where accounting errors take place.
1. In preparing source documents.
2. In preparing prime entry books.
3. In preparing ledger.
4. In preparing trial balance.
4. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 4
Type of accounting errors.
There are two types of errors.
1) …………………………………………………………………………………………………………………………………
2) …………………………………………………………………………………………………………………………………
Errors which are not shown by a trial balance.
1) Errors of omission.
2) Errors of commission.
3) Errors of originality.
4) Errors of principle.
5) Errors of compensating.
6) Errors of complete reversal.
01) Errors of omission.
......................................................................................................................
......................................................................................................................
......................................................................................................................
Example- Goods sold on credit to Ken, $700, had not been recorded in the books
The/General Journal
Description/Details Debit Credit
5. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 5
02) Errors of Commission.
......................................................................................................................
......................................................................................................................
......................................................................................................................
Example: - Cash received from D Dias $200 entered correctly in Cash book but it was entered by
mistake in the account for G Dias.
The/General Journal
Description/Details Debit Credit
03) Errors of original entry.
......................................................................................................................
......................................................................................................................
......................................................................................................................
Example 1 – Goods sold on credit to Timmy , $960,had been recorded in the sales journal as $690.
The/General Journal
Description/Details Debit Credit
Example 2 – Discount received amounting to $780 has been recorded in the books as $870.
The/General Journal
Description/Details Debit Credit
6. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 6
04) Errors of Principles.
......................................................................................................................
......................................................................................................................
......................................................................................................................
Example 1:- Purchase of a furniture worth $1000 has been debited to purchase account.
The/General Journal
Description/Details Debit Credit
Example 2 – Building repair expenses of $200 has been recorded in the Building Account.
The/General Journal
Description/Details Debit Credit
05) Errors of compensating.
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
Example: - The Heating and lighting account had been under-cast by $300 and the purchases
account had been over-cast by $300.
The/General Journal
Description/Details Debit Credit
7. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 7
06) Errors of complete reversal.
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
Example: - Payment of $ 200 to Charles (who is a creditor) has been entered in correct accounts
but in incorrect sides.
The/General Journal
Description/Details Debit Credit
02) Errors affecting trial balance agreement
* Due to some errors the totals of debit and credit balances of the trial balance do not agree.
Steps to be taken to rectify the errors
01) Find out the difference.
02) As the reason for this difference is not sure (suspense), write the word “Suspense Account” in
front of the difference and balance the trial balance temporarily.
03) Find out the reasons for difference.
04) Rectify the errors using journal entries.
Suspense Account
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
Reasons for disclosed errors
01) Omission of one entry.
02) Recording two different amounts.
03) Recording the double entry in the same side of the both accounts.
04) Errors in casting, balancing & transferring of prime entry books into ledger accounts.
05) Errors in preparation of the trial balance.
8. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 8
Examples for disclosed errors
01) Omission of one entry
......................................................................................................................
......................................................................................................................
Example: - Telephone bill paid $500 entered only in cash book but not in Telephone bill account.
The/General Journal
Description/Details Debit Credit
02) Recording two different amounts
......................................................................................................................
......................................................................................................................
Example: - Rent expenses paid, $1600, had been correctly entered in the cash book, but had
been recorded in the general expenses account as $6100.
The/General Journal
Description/Details Debit Credit
03) Recording the double entry in the same side of both accounts.
......................................................................................................................
......................................................................................................................
Example: - Salary payment $1500 has been recorded in the debit side of both accounts.
The/General Journal
Description/Details Debit Credit
9. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 9
04) Errors in casting, balancing & transferring of prime entry books into ledger accounts.
......................................................................................................................
......................................................................................................................
Example: - $350 has been under-cast in totaling the Sales Return Journal.
The/General Journal
Description/Details Debit Credit
05) Errors in preparation of the trial balance.
......................................................................................................................
......................................................................................................................
Example: - $425 the balance of Discount Received Account has not been extracted to the trial
balance.
The/General Journal
Description/Details Debit Credit
......................................................................................................................
......................................................................................................................
10. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 10
Statements of revised profit.
Sometime business has to prepare financial statements with a suspense accounts. That means
they prepare financial statements with errors for tax payment purpose or to present for Annual
General Meeting (AGM). Those financial statements are called incorrect or draft financial
statements and after identifying the errors the result of draft financial statements should be
rectified while rectifying the errors through double entries.
Then to rectify the result of draft Income Statement (draft profit or loss) a statement can be
prepared as follows.
The Statement of rectifying the draft profit
£ £
Draft profit ×××××
Add: Credit entries to expenses accounts (decrease in
expenses in correction)
×××
Credit entries to incomes accounts (increase in
incomes in correction)
××× ×××
×××××
Less: Debit entries to expenses accounts (increase in
expenses in correction)
×××
Debit entries to incomes accounts (decrease in
incomes in correction)
××× (×××)
Revised/Corrected profit ××××
11. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 11
Past Paper Questions
May/June 2018 – Paper 2 – Variant 22
12. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 12
13. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 13
14. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 14
October/November 2017 – Paper 2 – Variant 22
2 Hannah prepared a trial balance but its totals did not agree. A suspense account was
opened. She later discovered the following errors:
1 Rent receivable, $4900, had been debited to the rent payable account.
2 General expenses paid, $1200, had been correctly entered in the cash book, but had been
recorded in the general expenses account as $2100.
3 No debit entry had been made for purchases on credit from Ploy, $3400.
REQUIRED
(a) Prepare the entries in the general journal to correct the errors 1 to 3. Narratives are not
required.
General journal
Debit Credit
$ $
[7]
(b) Prepare the suspense account showing the original difference in the trial balance.
Suspense account
Details $ Details $
[4]
15. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 15
Hannah had prepared draft financial statements before correcting the errors. Her draft profit was
$15 600.
REQUIRED
(c) Complete the following table by calculating the effect of correcting each error on the draft
profit for the year.
Calculate the revised profit for the year.
Revision of profit
$
Draft profit for the year 15 600
Increase Decrease
$ $
1 Rent receivable, $4900, had
been debited to the rent
payable account.
2 General expenses paid, $1200,
had been correctly entered
in the cash book, but had
been recorded in the general
expenses account as $2100.
3 No debit entry had been made
for purchases on credit from
Ploy, $3400.
Revised profit for the year
[5]
16. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 16
(d) State the difference between the following types of errors which would not affect the
balancing of the trial balance.
(i) Commission and principle
……………………………………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………………………
(ii) Compensation and reversal
……………………………………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………………………
[4]
[Total: 20]
May/June 2017 – Paper 2 – Variant 21
2 Hong prepared draft financial statements on 31 March 2017 which showed a profit for the year of
$9200.
After the preparation of the financial statements, Hong discovered the following errors:
1 No entries had been made in the books in respect of $500 which Hong had withdrawn
from the bank for his personal use.
2 Goods sold on credit to Tung, $960, had been recorded in the sales journal as $690.
3 Discount received, $150, had been debited to the discount allowed account.
4 A payment of wages, $210, had been posted to the general expenses account.
5 A sale of fixtures and fittings at book value of $800, received by cheque, had been
recorded in the sales account.
REQUIRED
Prepare the journal entries to correct the errors 1–5. Narratives are not required.
(a) General journal
Debit Credit
$ $
17. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 17
[10]
2 Complete the table showing the effect on the draft profit of correcting each error. Where an
error has no effect on profit write „no effect‟.
Calculate the revised profit for the year.
Revision of profit for the year ended 31 March 2017
Increase Decrease
$ $ $
Draft profit for the year 9200
(a) No entries had been made in the books in
respect of $500 which Hong had withdrawn
from the bank for his personal use.
(b) Goods sold on credit to Tung, $960, had
been recorded in the sales journal as $690.
(c) Discount received, $150, had been debited
to the discount allowed account.
(d) A payment of wages, $210, had been posted
to the general expenses account.
(e) A sale of fixtures and fittings at book value of
$800, received by cheque, had been
recorded in the sales account.
Revised profit for the year
[6]
18. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 18
(c) Explain how the following errors could occur.
1) Compensating error
...........................................................................................................................................
...........................................................................................................................................
.......................................................................................................................................[2]
2) Error of principle
...........................................................................................................................................
...........................................................................................................................................
.......................................................................................................................................[2]
[Total: 20]
October/November 2016 – Paper 2 – Variant 22
1 The following balances remained in the books of Fabio at 30 June 2016. He was aware that there
were some book-keeping errors and that the trial balance would not balance.
$
Motor vehicle 9 500
Trade payables 8 500
Inventory 4 850
Revenue (Sales) 22 000
Purchases 14 400
Bank loan 2 000
Bank overdraft 1 630
Trade receivables 7 250
Capital 3 000
REQUIRED
(a) Complete the trial balance at 30 June 2016, balancing the trial balance by the use of an
appropriate account.
Fabio,Trial Balance 30 June 2016
Debit Credit
$ $
Motor vehicle
Trade payables
Inventory
Revenue (Sales)
Purchases
Bank loan
Bank overdraft
Trade receivables
Capital
[4]
19. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 19
On inspection of his books, Fabio located the following errors.
1 A sale of goods, $850, had been correctly recorded in the account of a credit customer, but
had been recorded in the revenue (sales) account as $580.
2 A purchase of goods, $700, had been correctly entered in the account of a credit supplier,
but had been credited to the purchases account.
REQUIRED
(b) Prepare the general journal entries to correct errors 1 and 2. Narratives are not required.
General journal
Debit Credit
$ $
[4]
(c) Complete the following table for each of Fabio‟s transactions in July 2016. If the capital is
not affected write „No effect‟. The first transaction has been completed as an example.
Transaction
Book of prime Account to be Account to be Effect on
entry debited credited capital $
Sold goods costing
Sales Journal Noah Revenue +$600
$900 on credit to
(Sales)
Noah for the list
price of $1500.
Noah returned
goods with a list
price of $100.
Paid Sophie a
cheque for $610.
A debt, $230, owed
by Zain was written
off.
[12]
[Total: 20]
20. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 20
2.
After preparing the draft income statement, which showed a profit for the year of $24 000, Lyana
discovered some errors.
REQUIRED
(b) Complete the following table showing the effect on the profit for the year of correcting each
error. Calculate the revised profit for the year.
$ $ $
Profit for the year 24 000
Increase Decrease
Purchases of $500 had not been recorded
in the books.
Goods, $800, had been counted twice in
the closing inventory.
No adjustment had been made for prepaid
insurance $950.
Discount allowed, $1600, had been added to
gross profit.
Equipment costing $15 000 (accumulated
depreciation $6600) had been depreciated
by 20% on cost. The reducing (diminishing)
balance method should have been used at
a rate of 20%.
Commission receivable, $400, had been
omitted from the draft income statement.
Revised profit for the year
[8]
21. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 21
October/November 2016 – Paper 2 – Variant 21
2. Valda later found the following errors in her books.
1 A cheque received from Fatin, $930, had been correctly entered in the cash book but had
been credited to the account of Martin.
2 The total of the discount allowed column in the cash book, $970, had been credited to the
discount received account.
3 Returns inwards of $390 had been correctly recorded in Ann‟s account, but had been
recorded as $930 in the returns inwards account.
REQUIRED
(c) Name the type of error that Valda made by crediting Martin‟s account.
...............................................................................................................................................[1]
(d) Prepare the general journal entries to correct errors 1, 2 and 3.Narratives are not required.
General journal
Debit Credit
$ $
[7]
22. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 22
October/November 2015 – Paper 2 – Variant 22
2.
After preparing the sales ledger control account, Yana discovered the following errors.
1 Goods sold on credit to Tong, $560, had not been recorded in the books.
2 Proceeds of sale of fixtures and fittings, $800, had been recorded as cash sales.
3 Discount allowed to R Biggs, $56, had been debited to his account and credited to the
discount allowed account.
4 A sale of goods to Mia, $75, had been recorded in the account of Mason.
REQUIRED
(b) Name the type of error in each of 1–4. Error 1 has been completed as an example.
[3]
(c) Prepare the general journal entries to correct the errors in 1–4.Narratives are not required.
General journal
Details Dr Cr
$ $
[8]
(d) State one reason why a trader may use a suspense account.
...................................................................................................................................................
.............................................................................................................................................[1]
Error Type of error
1 Omission
2
3
4
23. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 23
October/November 2015 – Paper 2 – Variant 21
2 Martino‟s trial balance at 30 September 2015 did not agree and a suspense account was
opened. The following errors were discovered.
1 The total of the purchases journal had been undercast by $950.
2 Discount received, $85, had been debited to the discount received account.
3 A payment of rent, $750, had been correctly entered in the cash book, but recorded in the rent
account as $570.
4 A purchase of office fixtures, $2300, had been recorded in the general expenses account.
REQUIRED
(a)Show the entries in the general journal to correct items 1 to 4.Narratives are not required.
General Journal
Debit Credit
$ $
[8]
(b) Prepare the suspense account at 30 September 2015 showing the original difference on the
trial balance.
Suspense account
Date Details $ Date Details $
[4]
24. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 24
(c) Complete the following table to show the effect on the profit for the year of correcting
each error.
The first item has been completed as an example.
Error Increase/Decrease/ Amount
No effect $
1 The total of the purchases journal had Decrease 950
been undercast by $950.
2 Discount received, $85, had been
debited to the discount received
account.
3 A payment of rent, $750, had been
correctly entered in the cash book, but
recorded in the rent account as $570.
4 A purchase of office fixtures, $2300,
had been recorded in the general
expenses account.
[6]
(d) Explain why an error of commission would not be revealed by the trial balance.
...................................................................................................................................................
...................................................................................................................................................
..................................................................................................................................................
...................................................................................................................................................
.............................................................................................................................................. [2]
[Total: 20]
25. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 25
May/June 2015 – Paper 2 – Variant 21
1 Mira prepared a trial balance using the following information on 31 March 2015. The trial balance
failed to balance.
$
Office fixtures (at cost) 18 000
Office fixtures provision for depreciation 7 200
Trade payables 5 400
General expenses (prepaid) 1 520
Trade receivables 3 700
Inventory 7 800
Bank overdraft 2 600
Capital 16 000
REQUIRED
(a) Prepare the trial balance at 31 March 2015, including an appropriate balancing entry.
Mira,Trial Balance at 31 March 2015
Debit Credit
$ $
Office fixtures (at cost)
Office fixtures provision for depreciation
Trade payables
General expenses (prepaid)
Trade receivables
Inventory
Bank overdraft
Capital
[4]
On inspecting the books, Mira found the following errors:
1 A payment for general expenses, $750, had been correctly entered in the bank account, but
had been recorded in the general expenses account as $570.
2 General expenses, $1000, had been recorded in the office fixtures account.
REQUIRED
b) Prepare the entries in the general journal to correct items 1 and 2. Narratives are not required.
General Journal
Debit ($) Credit ($)
[4]
May/June 2014 – Paper 2 – Variant 22
26. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 26
2. On inspection of her ledger, Yee discovered the following errors:
1.A cheque received from D Moy, $450, had been posted to the account of D Kay.
2.An invoice for goods received from G Fallen, costing $790, had been recorded in the
purchases journal as $970.
3.Discount received, $45, had been debited to the discount received account and credited
to F Tay.
4.Repairs to fixtures and fittings, $800, had been recorded in the fixtures and fittings account.
REQUIRED
b)Prepare the journal entries to correct the errors in 1 to 4 above. Narratives are not required.
General Journal
Debit ($) Credit ($)
[8]
c) Complete the following table to name the type of error in 1 to 4 on the previous page. The
first item has been completed as an example.
Type of error
1.A cheque received from D Moy, $450, had been
posted to the account of D Kay.
Commission
2. An invoice for goods received, costing $790, had
been recorded in the purchases journal as $970.
3. Discount received, $45, had been debited to the
discount received account and credited to F Tay.
4.Repairs to fixtures and fittings, $800, had been
recorded in the fixtures and fittings account.
[3]
d) State two reasons why a suspense account would be used.
...............................................................................................................................
...............................................................................................................................
........................................................................................................................... [2]
27. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 27
May/June 2014 – Paper 2 – Variant 21
2.On reviewing his purchases account, Ghani found the following errors.
1.Goods purchased for cash, $450, had not been recorded in the books.
2.Goods purchased on credit from C Maxley, $950, had been recorded in the books as $590.
3.A purchase of a motor vehicle, $6000, had been recorded in the purchases account.
4.Goods purchased from Y Li, $820, had been credited to the purchases account an debited to
Y Li‟s account.
REQUIRED
b) Prepare journal entries to correct the errors in 1 to 4 above. Narratives are not required.
General Journal
Debit ($) Credit ($)
c) Complete the table below naming the type of error and the effect on the gross profit of
correcting the error. The first item has been completed as an example.
Type of error Effect on gross profit
1. Goods purchased for cash, $450, had not been
recorded in the books.
Omission Decrease $450
2. Goods purchased on credit from C Maxley, $950,
had been recorded in the books as $590.
3. A purchase of a motor vehicle, $6000, had been
recorded in the purchases account.
4. Goods purchased from Y Li, $820, had been
credited to the purchases account and debited to Y
Li‟s account.
28. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 28
October/November 2013 – Paper 2 – Variant 21
3 Rod‟s trial balance at 30 September 2013 failed to agree.
(a) Name two types of errors not shown by a trial balance.
..................................................................................................................
.............................................................................................................. [2]
Rod later discovered the following errors:
1. the sales journal had been over added by $279;
2. the total of the discount allowed column in the cash book, $123, had been
credited to the discount received account;
3. a payment to B Kaur, $105, had been correctly entered in the bank account but
posted to the creditor‟s account as $150
(b) Complete the following table showing the effect and amount each of the above errors
would have on B Kaur‟s profit for the year if left uncorrected. The first item has been
completed as an example.
Overstated Understated No effect Amount
$
1 ✓ 279
2
3
[4]
(c ) Write up the journal entries to correct these errors. Narratives are not required.
General Journal
Debit ($) Credit ($)
[7]
[Total 13]
May/June 2013 – Paper 2 – Variant 22
29. Cambridge O Level Correction of Accounting Errors
Accounting with Sanjaya Sir 29
2 John Given’s trial balance at 31 May 2013 failed to agree and a suspense account for the difference,
$926 debit, was opened.
The following errors were discovered:
1 Commission received, $120, had been recorded in the account twice.
2 Total trade receivables were understated by $824.
3 A payment for insurance, $650, had been correctly entered in the cash book, but
recorded in the insurance account as $560.
4 The total of the sales returns journal had been overcast by $108.
REQUIRED
(a) Show the entries in the general journal to correct items 1 to 4 above.Narratives are not
required.
General Journal
Debit ($) Credit ($)
[8]
(b) Prepare the suspense account at 31 May 2013.
Suspense account
Date Details $ Date Details $
[4]
(c) Explain three types of errors not shown by a trial balance.
……………………………………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………………………[6]
[Total 18]
30. Cambridge O Level Correction of Accounting Errors
30Correction of Accounting Errors
Cambridge IGCSE
SPECIMEN PAPER
For examination from 2020
4.Wasim is a trader. His financial year ends on 31 March.
The totals of his trial balance on 31 March 2017 did not agree. The difference was a shortage
on the debit side of $685. This was entered in a suspense account.
The following errors were later discovered.
1.The total of a page of the purchases account, $3842, had been carried forward as $3824.
2.A cheque received from DEC Limited, $150, had been credited to the account of DDE Limited.
3.The balance of the petty cash book, $100, had been omitted from the trial balance.
4.Repairs to a motor vehicle, $283, had been debited to the motor vehicles account.
5.Purchase of fixtures, $2000, on credit from OS Supplies had been debited to OS Supplies
and credited to fixtures account.
6.The total of the discount allowed column in the cash book, $250, had been credited to the
discount received account in the ledger.
7.The total of the analysis column for stationery in the petty cash book, $67, had not been
transferred to the stationery account in the ledger.
REQUIRED
(a) Prepare the suspense account. Start with the balance arising from the difference on
the trial balance. The account should be balanced or totalled as necessary.
Wasim
Suspense account
Date Details $ Date Details $
[7]
(b) Prepare journal entries to correct two of the errors which do not require correcting by
means of the suspense account. Narratives are required.
General Journal
Debit ($) Credit ($)
31. Cambridge O Level Correction of Accounting Errors
31Correction of Accounting Errors
[6]
(c) Identify the type of error made in Error 2.
……………………………………………………………………………………………………………………………………… [1]
Wasim prepared draft financial statements for the year.
REQUIRED
(d) Complete the following table by placing a tick () in the correct column to indicate
whether the profit for the year would be affected by each of the errors.
Ignore depreciation of non-current assets.
The first one has been completed as an example.
error affects the profit for the year
does not affect the profit for the
year
number
1
2
3
4
5
6
7
[6]
[Total: 20]
32. Cambridge O Level Correction of Accounting Errors
32Correction of Accounting Errors
Model Questions
01. Yasith prepared her draft final for the year ended 30 April 2018 and calculate net profit for the year
of $14 670. After the preparation of the draft final accounts following errors were discovered, which
had not been revealed by the trail balance.
I. Goods, $3000,purchased on credit from Najith had not been entered in the accounting records.
II. Goods, $1300, sold on credit to T Cley had been correctly entered in the sales account but had
been entered into the account of C Tilley.
III. A Motor vehicle expense, $500, for the year had been posted to the motor vehicles account.
IV. A discount received from Ashen of $250 had been entered in the debit side of discount
received and credited to the account of Ashen.
Required
(a) Name the type of error in (1) to (4) above.
1) ………………………………………………………………………………………………………………………………
2) ………………………………………………………………………………………………………………………………
3) ………………………………………………………………………………………………………………………………
4) …………………………………………………………………………………………………………………………[4]
(b) Prepare the journal entries required to correct each of the errors (1) to (4).narrative are not
required.
General Journal
Debit ($) Credit ($)
[9]
(c) Calculate the revised net profit for the year ended 30 April 2018.
………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………………
…………………………………………………….......[5]
[Total: 18]
33. Cambridge O Level Correction of Accounting Errors
33Correction of Accounting Errors
02) The trial balance prepared as at 31st
March 2018 by Chathura PLC did not tally. The difference of
the trial balance $55 000 was credited to a suspense account. Subsequent examination of accounting
records revealed following errors.
(01) A sales invoice of $15 000 has been omitted from the books.
(02) Bank loan repayment of $10 000 has been recorded only in the cash book.
(03) Dividend income of $45 000 has been recorded in dividend income account as $25 000.
(04) $15 000 the balance of one page of the Sales account has not been brought forward to the next
page.
(05) Rent income $20 000 has not been recorded in the trial balance.
(06) Interest received $5 000 has been recorded debit side in the Interest expense account.
(a) Prepare the journal entries required to correct each of the errors (1) to (6).narrative are not
required.
General Journal
Debit ($) Credit ($)
(b) Prepare the suspense account at 31 March 2018.
Suspense account
Date Details $ Date Details $
34. Cambridge O Level Correction of Accounting Errors
34Correction of Accounting Errors
Important Slides
35. Cambridge O Level Correction of Accounting Errors
35Correction of Accounting Errors
36. Cambridge O Level Correction of Accounting Errors
36Correction of Accounting Errors
A small advice from your teacher
You are good enough. Most people are afraid to do things because they are afraid they’re not
good enough, afraid they’ll fail. But you are good enough — learn that and you won’t be
afraid of new things, won’t be afraid to fail, won’t need the approval of others. You’ll be pre-
approved — by yourself.
All you need to be happy is within you. Many people seek happiness in food, drugs, alcohol,
shopping, partying, sex … because they’re seeking external happiness. They don’t realize the
tools for happiness aren’t outside them. They’re right inside you: mindfulness, gratitude,
compassion, thoughtfulness, the ability to create and do something meaningful, even in a small
way.
All the best children….!
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