1. @ 2012, Cengage Learning Analyzing Transactions LO 4b – Discovery and Correction of Errors

2. Trial Balance Errors LO 4 Errors can be made in the accounting system that affect the trial balance.

3. Errors Causing Unequal Trial Balance LO 4 Errors Trial balance preparation errors Account balance errors Posting errors Column incorrectly added Amount incorrectly entered on trial balance Balance entered in wrong column or omitted Balance incorrectly computed Balance entered in wrong column of account Wrong amount posted to an account Debit posted as credit, or vice versa Debit or credit posting omitted

4. Tips for Discovering Errors LO 4 Tip 1:Check for a difference of l0, 100, or 1,000 between the two column totals. This is a good indication that one of the columns has been incorrectly totaled.

5. Tips for Discovering Errors LO 4 Tip 2:Check if the difference between the totals can be evenly divided by two. A posting may have been omitted or a debit may have been posted as a credit (or vice versa).

6. Trial Balance Errors - Transposition  A transposition occurs when the order of the digits is changed by mistake, such as writing $542 as $452 or $524. LO 4

7. Trial Balance Errors - Slide  In a slide, the entire number is moved one or more spaces to the right or the left by mistake, such as writing $542.00 as $54.20 or $97.50 as $975.00.

8. Discovery of Errors LO 4 Among the types of errors that will not cause the trial balance totals to be unequal are the following: 1.Failing to record a transaction or to post a transaction. 2.Recording the same erroneous amount for both the debit and the credit parts of a transaction.

9. Discovery of Errors LO 4 Among the types of errors that will not cause the trial balance totals to be unequal are the following: 3.Recording the same transaction more than once. 4.Posting a part of a transaction correctly as a debit or credit but to the wrong account.

10. Errors Not Affecting the Trial Balance  If an error has already been journalized and posted to the ledger, a correcting journal entry is normally prepared. LO 4

11.  Another type of error is a posting error.  Assume that on May 5 a $12,500 purchase of office equipment on account was incorrectly journalized and posted as a debit to supplies and a credit to accounts payable for $12,500. Errors Not Affecting the Trial Balance LO 4

12. Errors Not Affecting the Trial Balance LO 4  The entry to correct the error is: