Trial Balance & Errors

hannahsophie.austin
Mind Map by , created over 6 years ago

aLevel Business - Finance Mind Map on Trial Balance & Errors, created by hannahsophie.austin on 06/21/2013.

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Created by hannahsophie.austin over 6 years ago
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Trial Balance & Errors
1 TRIAL BALANCE:
1.1 Is a summary of all the balances from the individual accounts in the ledgers. It acts as an arithmetical check on accuracy of the double-entry bookkeeping system, ensuring that accounting entries are error-free prior to the compilation of the final accounts.
2 Error of Commission:
2.1 Occurs when one or both double entries are made in the correct classification of account but entered under the wrong name.
2.1.1 For Example: £100 - P.Smith instead of £100 - B.Smith
3 Error of Omission:
3.1 Occurs when both double entries for a transaction have been left out from the book of accounts.
3.1.1 Transaction has not been records anywhere.
4 Error of Principle:
4.1 Occurs when one or both of the double entries are made in the wrong classification of account.
5 Compensating Error:
5.1 Where two or more opposing errors act to cancel each other out.
6 Error of Original Entry:
6.1 Where the double entry for a transaction have been recorded under the correct name but with the wrong amount.
7 Error of Reversal:
7.1 The entries have been made on the wrong side of accounts.
7.1.1 has been put in the correct account but has been recorded as a debit instead of a credit.

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