Help with suspense accounts and correcting errors question

SCloMarSCloMar Registered Posts: 4
Hi there! I'm new to the forum and was hoping someone might be able to help me. I've got my bookkeeping controls exam in just over a week time and still struggling to get my head around suspense accounts and correcting errors not shown by the trial balance too. I've had a go at a question in the attached pic and I'm completely clueless as to whether I'm correct or not. Just hoping someone kind can have a look and see if I'm on the right track before I venture any further? Many thanks!

Comments

  • rileybrileyb Registered Posts: 5
    It is a good attempt, but you have made a few mistakes.

    a) You have basically repeated the error made in the question.

    The correct entry should be
    Dr: Purchases
    Cr : Stationery

    As this removes the incorrect Stationary entry and puts it in the Purchases Account instead.

    Also this is not an Error of Principle. Because the person making the entry has confused two expense (or Revenue Expenditure) transactions - I.e Purchases and Stationery, this is actually an Error of Commission.

    Easiest way to remember , Commission has SI in it - meaning Similar.

    e) You have only done half the job. You haven't recorded the Irrecoverable Debt expense to the business.

    The full entries would be

    Dr Irrecoverable Debts 150 (Expense to the Business)

    Dr VAT 30 (Reclaimable VAT)

    Cr SLCA 180 (As you have to remove the Customer's balance from the Control Account).
    SCloMar
  • SCloMarSCloMar Registered Posts: 4
    Thanks so much! You've been so helpful in explaining my errors, I really appreciate it. Hope you have a fantastic weekend. Right, now I know where I've gone wrong, back to revision! 😀
  • MichaelNortonMichaelNorton Registered Posts: 20
    It will be somewhere in this playlist



    Which is based on the Osborne book. I made them for my students.
    SCloMar
  • MichaelNortonMichaelNorton Registered Posts: 20
    An error of principle would be that the posting was to an account that was not in the same category under the accounting equation

    Assets = liabilities plus equity

    So say the asset purchase was debited to the expense account which sits under equity.

    If we are in the same section of the accounting equation it is an error of commission.

    In a you need to reverse out what has been posted in error and put in what should be there. The vat element is not wrong and it is only the £400 that needed to be reversed out
    Cr stationery (reverse out) £400
    Dr purchases (post) £400

    B) is an error of original entry reverse it out and post the correct journal. You do not do the net difference as a journal because that way you have an audit trail back to the financial document so you were right there
  • MichaelNortonMichaelNorton Registered Posts: 20
    C is right error of principle reverse the original journal and post the correct one
  • MichaelNortonMichaelNorton Registered Posts: 20
    D is right and together with b clears your suspense account
  • MichaelNortonMichaelNorton Registered Posts: 20
    E looks like an error of ommission so we are not going to get the £180 debtor

    Cr debtor 180

    And we are going to get 30 back from hmrc

    Dr hmrc 30

    And the shareholders are going to pay the rest out of their future income

    Dr irrecoverable debt expense 150
  • MichaelNortonMichaelNorton Registered Posts: 20
    Hope that helps but it is a bit of a nightmare doing this on a phone scrolling up and down

    Good luck and I hope the videos help you
    SCloMar
  • SCloMarSCloMar Registered Posts: 4
    this is great thanks. and the video is really helpful.

    thank you for your help. its really kind and has helped me get my head around things. just got a weekend planned full of revision now!
  • SCloMarSCloMar Registered Posts: 4
    Hi everyone. Just wanted to let you all know that I sat my exam last night and I passed! so I just want to thank you all for your help. This is the first time I've used the forum and everyone has been so helpful and prompt with my queries! Hopefully one day I'll be able to help other people the way you guys did!
    Thank you!
    Right onto the next module now... elements of costing!
  • SigitaGibSigitaGib Registered Posts: 6
    Could someone help me with correcting errors. I discovered an error in sage and not sure how to fix it. An asset was bought for £250 and posted as visa payment. At the same time posted as cash payment. So i have dr £ 500 for an asset and cr £250 bank account and cr £250 petty cash. How to fix it leaving just bank transaction? Thanks in advance
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