Page 93 - Accounting Principles (A Business Perspective)

2. Recording business transactions

573 or 110 as 101). A slide error occurs when you place a decimal point incorrectly (e.g. USD 1,500 recorded as USD
15.00). Thus, when a difference is divisible by 9, compare the trial balance amounts with the general ledger account
balances to see if you made a transposition or slide error in transferring the amounts.

An ethical perspective:
Financial Deals, Inc.

Larry Fisher was captain of the football team at Prestige University. Later, he earned a master's

degree in business administration with a concentration in accounting.
Upon graduation, Larry accepted a position with Financial Deals, Inc., in the accounting and
finance division. At first, things were going smoothly. He was tall, good looking, and had an
outgoing personality. The president of the company took a liking to him. However, Larry was
somewhat bothered when the president started asking him to do some things that were slightly
unethical. When he protested mildly, the president said: "Come on, son, this is the way the business
world works. You have great potential if you don't let things like this get in your way."
As time went on, Larry was asked to do things that were more unethical, and finally he was
performing illegal acts. When he resisted, the president appealed to his loyalty and asked him to be

a team player. The president also promised Larry great wealth sometime in the future. Finally,
when he was told to falsify some financial statements by making improper entries and to sign some
documents containing material errors, the president supported his request by stating: "You are in
too deep now to refuse to cooperate. If I go down, you are going with me." Through various
company schemes, Larry had convinced some friends and relatives to invest about USD 10 million.
Most of this would be lost if the various company schemes were revealed.
Larry could not sleep at night and began each day with a pain in his stomach and by becoming

physically ill. He was under great strain and believed that he could lose his mind. He also heard that
the president had a shady past and could become violent in retaliating against his enemies. If Larry
blows the whistle, he believes he will go to prison for his part in the schemes. (Note: This scenario is
based on an actual situation with some facts changed to protect the guilty.)

If you still cannot find the error, it may be due to one of the following causes:
• Failing to post part of a journal entry.
• Posting a debit as a credit, or vice versa.
• Incorrectly determining the balance of an account.
• Recording the balance of an account incorrectly in the trial balance.

• Omitting an account from the trial balance.
• Making a transposition or slide error in the accounts or the journal.
Usually, you should work backward through the steps taken to prepare the trial balance. Assuming you have
already re-totaled the columns and traced the amounts appearing in the trial balance back to the general ledger
account balances, use the following steps: Verify the balance of each general ledger account, verify postings to the
general ledger, verify general journal entries, and then review the transactions and possibly the source documents.

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