Fill in the blank: Errors of omission can occur when a transaction is ___ from the books.

Completely or partially omitted

What impact do compensating errors have on the trial balance?

Compensating errors offset each other, resulting in no overall impact on the trial balance, even if individual accounts are incorrectly stated.

True or False: A trial balance can be artificially balanced by opening a suspense account.

True. A suspense account can be used to balance the trial when there is a discrepancy between the debit and credit columns.

Fill in the blank: Errors affecting the trial balance include wrong casting of ___ and incorrect total amounts.

Subsidiary books

What is the consequence of posting an amount on the wrong side of an account?

It causes the trial balance to be unbalanced, as it misrepresents the account's financial position.

C) Errors of principle

What is the effect of a wrong entry in the purchases day book on financial statements?

Wrong entries misstate financials.

• Inflated expenses reported inaccurately.

• Impact on net income calculations.

• Potential misguidance for stakeholders.

How should errors found after the final accounts are prepared be rectified?

Errors corrected in next period.

• Use suspense accounts.

• Adjust prior period items.

• Ensure accurate reporting.

Fill in the blank: The method of correcting errors at the stage of preparing the trial balance involves identifying ___ and adjusting the relevant accounts.

Omissions or wrong amounts

Explain the different types of errors that can occur during the recording of financial transactions in accounting.

Errors in accounting can be classified.

• Errors of Principle violate rules.

• Errors of Omission miss transactions.

• Errors of Commission record incorrectly.