Page 169 - Microsoft Word - 00 - Prelims.docx

The trial balance, accounting errors and suspense accounts

Nature of accounting errors

Errors where the trial Errors where the trial

balance still balances: balance does not balance:

 error of omission  posting only one part of

 error of commission the double-entry

 error of principle  posting a different value
of debits and credits
 error of original entry
 arithmetic errors
 reversal of entries
 opening balance not
 duplication of entries brought down correctly

 compensating errors.  extraction error.

In situations where the trial balance does not balance, it is good practice to open a
suspense account and record the amount of the difference from the trial balance in
the suspense account.

The use of a suspense account allows financial statements to be prepared subject to
the correction of errors.

163