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Chapter 14

Accounting entries for the correction

of errors

Irrespective of the nature of an accounting system, if there are errors or omissions in
the accounting records, they need to be corrected.

The following procedure should be used when the trial balance is not in agreement:

 calculate the difference between the total of debits and total of credits in the trial
balance

 if the total of debits exceeds the total of credits, post the difference to the credit
side of the suspense account

 if the total of credits exceeds the total of debits, post the difference to the debit
side of the suspense account

 identify the error(s) which account for the suspense account difference

 record the correcting entries in the journal

 update the ledger accounts and clear the suspense account.

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