Errors disclosed by the trial balance.

I'm doing practice questions on errors disclosed by the trial balance.
The question ask whether the following error would or wouldn't be disclosed by the trial balance:

'Recording a payment from a credit customer for £200 in the debit side of the sales ledger account'.

I thought it would be disclosed by the trial balance, as the account would have a higher debit amount as a result. However, the book says it wouldn't be disclosed by the trial balance.

Can someone please explain this to me, as I am confused?

Comments

  • NickCraggsNickCraggs Posts: 51Registered
    Hi Shaun, the normal entry for a receipt from a credit customer is debit bank (as you have more money, so this is an increased asset) and credit the SLC (to reduce the asset of people owing you money).

    If you have debited the bank and debited the SLC, your TB will be imbalanced and so the TB will show the error.
    Nick Craggs FMAAT ACA, AAT Council Member and Distance Learning Manager at First Intuition

    firstintuition.co.uk/
    shaunpoll
  • JC101JC101 Posts: 22AAT Student
    Just to add... I think the answer is it wouldn't be disclosed because the question refers to the Sales Ledger Account, not the SLC account. Since the Sales Ledger Account isn't brought into the trial balance, any errors made in the Sales Ledger Account (or indeed the Purchases Ledger Account) won't be seen in the trial balance.

    I too I'm revising this module and have found I need to read the question a couple of times to ensure I've understood it correctly.
    shaunpoll
  • g_bonsorg_bonsor Posts: 26Registered
    Generally, both the SLCA and the Sales account would be included in the trial balance.

    The reason that this error is not disclosed by the trial balance is because effectively it is a reversal of entry so this does not show up on the trial balance.

    What Nick was trying to say is that if it had been that the Sales Ledger Control was debited and the bank was also debited, the transaction wouldn't be balanced as there is nothing on the credit side, so the trial balance would not balance - meaning you could identify the error.

    However, in this scenario it seems that the Sales Ledger Control has been debited and the bank credited, which means it would not be identified in the trial balance because there is an entry on both the credit and debit side.

    Hope this makes some kind of sense?
    shaunpoll
  • CeeJaySixCeeJaySix Well-Known Posts: 645Registered
    No.

    JC101 has the correct answer.

    I think it's badly worded, but the sales ledger account is the customer's own individual account within the sales ledger. This is not part of the double entry.

    As long as the sales ledger CONTROL account has been correctly credited, the TB will not expose the error.

    A reconciliation of the SLCA to the sales ledger would however find it.

    The sales account is something else altogether and not mentioned in the OP's question.
    shaunpoll
  • g_bonsorg_bonsor Posts: 26Registered
    I see now! I have read the question wrong I thought it was talking about the SLCA.

    So it debited the sales ledger account instead of debiting the bank?
  • JC101JC101 Posts: 22AAT Student
    g_bonsor said:

    So it debited the sales ledger account instead of debiting the bank?

    No. Only one error is mentioned in the question - the Sales Ledger Account was debited when it should have been credited.

    So you have to assume the SLC Account was credited correctly and the Bank Account was debited correctly (so these two double entries balance). So when the SLC Account and Bank Account are brought into the trial balance, the trial balance balances.

    The only error is with the Sales Ledger Account, which is a subsidiary ledger and not part of the double entry system and therefore it is not part of the trial balance. So the error will not be disclosed by the trial balance.

    shaunpoll
  • shaunpollshaunpoll Posts: 34Registered
    Thanks for all the comments, this now makes sense to me.
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