Page 44 - MAZOO EBOOK 1_Neat

Accrued expenses are expenses a company needs to account for, but for which no invoices have

been received and no payments have been made. Here are some common examples of

expenses that can be accrued:

Interest on loan(s), Wages for employees, Utilities and Rent etc. (37)

1.4 Correction of errors and suspense account

The financial accounting term correction of an error in financial reports refers to the

rectification of a mistake caused by a transaction that was recorded incorrectly or omitted.

(htt40)

Types of error

 Omission – a transaction is not recorded at all.

 Error of commission – an item is entered to the correct side of the wrong account.

 Error of principle – an item is posted to the correct side of the wrong type of account.

 Error of original entry – an incorrect figure is entered in the records and then posted to

the correct account.

 Reversal of entries – the amount is correct, the accounts used are correct, but the

account that should have been debited is credited and vice versa.

 Addition errors – figures are incorrectly added in a ledger account.

43