Question Tag: Correction of Errors

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FA – May 2014 – L1 – SA – Q2 – Correction of Errors

Suspense account entries and explanation of the effects of errors on accounts and profit.

Question

The bookkeeper of Jafola Ltd, having been unable to agree the trial balance as at 31 January 2013, raised a Suspense Account in which he entered the difference. Consequently, he prepared a draft Statement of Financial Position to reflect the amount in the Suspense Account.

On investigation, the following errors were discovered:

i. The addition of the analysis column in the tabular purchase journal posted to goods purchased for resale account was found to be under-cast by N15,000, though the addition of the total column was correct.
ii. Goods bought from a supplier amounting to N5,250 had been posted to the credit of his account as N55,000.
iii. A dishonoured bill of exchange receivable for N200,000 returned by the Company’s bank had been credited to the bank account and debited to bills receivable account.
iv. An item of N10,500 entered in the sales returns book was posted to the debit of the customer who returned the goods.
v. Sundry items of plant sold amounting to N300,000 were posted to the sales day book, the total of which had been posted to the credit of the sales account.
vi. A sum of N60,000 owed by a customer was omitted from the schedule of sundry receivables.
vii. Discounts amounting to N2,250 allowed to a customer were duly entered in his account but not posted to the discounts allowed account.
viii. An amount of N45,000 being tenement rates paid in advance in the previous year was not brought forward as a balance on the tenement rates account.

You are required to:

a. Show the Suspense Account as raised by the bookkeeper with the adjusting entries. (5 Marks)

b. Explain the effect the above errors would have on the profit shown in the accounts (if not rectified) and on the total accounts. Assume the purchase and sales ledgers to be self-balancing. (10 Marks)

Answer

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Tags: Accounting Adjustments, Correction of Errors, Suspense account
Level: Level 1

Topic: Correction of errors
Series: MAY 2014

FA – Nov 2014 – L1 – SB – Q2 – Correction of Errors

Preparing journal entries, suspense account, and net profit adjustment based on detected errors.

Question

The Accounts Officer of Endwell & Co was unable to agree the trial balance. The difference of N175,200 was placed on the debit side of a suspense account. After a careful review of the accounting entries in Endwell & Co’s books, the following errors were detected:

i. A sum of N120,000 representing credit sales to a customer was posted to the credit of his account.
ii. A cheque of N30,000 paid into the bank was later dishonoured, but the customer’s account was debited with N3,000.
iii. The Purchase Day Book was overcast by N18,000.
iv. The debit side of a supplier’s account was overcast by N60,000.
v. The returns inwards of N9,000 was omitted in a customer’s account.
vi. Discount allowed was overcast by N4,800.
vii. A credit sale of two office machines of N24,000 each was entered into the sales day book.
viii. The statement of profit or loss for the year-end disclosed a net profit of N210,000.

Required:

a. Prepare journal entries with appropriate narrations to correct the errors. (12 Marks)
b. Prepare the suspense account. (4 Marks)
c. Prepare a statement to adjust the net profit after the correction. (4 Marks)
(Total 20 Marks)

Answer

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Tags: Correction of Errors, Journal Entries, Profit Adjustment, Suspense account
Level: Level 1

Topic: Correction of errors
Series: NOV 2014

FA – Nov 2014 – L1 – SA – Q15 – Bank Reconciliation

Identifying the correct overdrawn bank balance after corrections in cash book entries.

Question

The cash book shows an overdrawn bank balance of N65,000 at 30 September, 2014. It was subsequently discovered that a standing order of N12,500 has been recorded twice and that a dishonored cheque for N9,000 has been debited in the cash book instead of being credited. What is the correct bank balance?

A. N66,700 O/D
B. N67,500 O/D
C. N70,500 O/D
D. N71,600 O/D
E. N72,500 O/D

Answer

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Tags: Bank Reconciliation, Cash Book, Correction of Errors, Overdrawn Balance
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2014

FA – May 2016 – L1 – SB – Q1c – Correction of Errors

Prepare journal entries to correct errors in the accounts.

Question

The following balances were extracted from the books of Arewa & Sons on December 31,
2015.

On investigation, you discovered the following:
(i) Receivables amounting to N75,980,000 have been omitted.
(ii) Receivables amounting to N2,800,000 have been written off as bad debt, but no
postinghadbeenmadethus renderingtheentryasingleentry.
(iii) Discount received shown in the cashbook and totaling N4,065,000 had not been
posted to the general ledger.
(iv) The figure of wages shouldhavebeenN122,050,000.
(iv) DrawingsamountingtoN29,730,000 have been omitted.

You are required to

i. Prepare journal entries to correct the errors.
ii. Prepare the trial balance after effecting the corrections.

Answer

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Tags: Correction of Errors, Financial Statements, Journal Entries
Level: Level 1

Topic: Correction of errors
Series: MAY 2016

FA – MAY 2015 – L1 – SA – Q3 – Correction of Errors

Determine the journal entries to correct an error involving telephone and motor vehicle expenses.

Question

A draft financial statement of DS Enterprises revealed that an amount of N10,000 expended on repairs of telephone was recorded as motor vehicle expenses. State the entries to reverse this error.
A. Dr. Motor vehicle expenses account, Cr. Telephone expenses account
B. Dr. Telephone expenses account, Cr. Suspense account
C. Dr. Motor vehicle account, Cr. Suspense account
D. Dr. Telephone expenses account, Cr. Motor vehicle expenses account
E. Dr. Suspense account, Cr. Telephone expenses account

Answer

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Tags: Correction of Errors, Motor Vehicle, Telephone Expenses
Level: Level 1

Topic: Correction of errors
Series: MAY 2015

FA – April 2022 – L1 – Q1 – Preparation of Partnership accounts

Explanation of the importance of management accounts and correction of errors in a trial balance using journal entries and suspense account.

Question

a) The owner of Aspen Enterprise, as part of advice to a newly appointed Accountant, said that she should focus on the preparation of the year-end Financial Statements and not the preparation of Management Accounts.

Required:
Explain to the owner of Aspen Enterprise why Management Accounts is important.
(10 marks)

b) The trial balance of Naana Akyeaa failed to agree. The credit exceeded the debit by GHȼ5,760. The difference was placed in a suspense account. After a review, the following errors were discovered:

The total of the purchase account was undercast by GHȼ2,000.
Cash sales of GHȼ2,470 were recorded by debiting sales with GHȼ2,470 and crediting cash with GHȼ6,430.
Mr. Samson, whose debt was the subject of a specific provision for bad debt, paid his debt of GHȼ1,080 in full. The only entry made for this transaction was to credit receivables with GHȼ1,080.
An invoice for rates for GHȼ2,250 was found behind the bookkeeper’s desk. The invoice had not been accounted for.
The total of the sales returns day book was overcast by GHȼ1,280.
Discounts received of GHȼ840 was recorded by crediting receivables and debiting discounts received.
A new piece of machinery valued at GHȼ24,300 was written off to repairs in error. The depreciation policy of Naana Akyeaa is to depreciate machinery by 10% on a straight-line basis. The sole trader charges a full year’s depreciation in the year of purchase and none in the year of sale.

Required:
i) Prepare journal entries, with the appropriate narratives, necessary to correct the above errors.
(6 marks)
ii) Prepare a Suspense Account.
(4 marks)

Answer

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Tags: Correction of Errors, Journal Entries, Management Accounts, Suspense account
Level: Level 1

Topic: Preparation of Partnership accounts
Series: APR 2022

FA – Nov 2019 – L1 – Q2 – Correction of errors

Calculate specific financial ratios, discuss the advantages and disadvantages of ratio analysis, and explain the responsibilities of directors and auditors towards financial statements.

Question

a) Nene Koba, a sole trader with a small business, extracted a trial balance as at 30 June 2018, which did not agree. The credits exceeded the debits by GH¢3,275, and the difference was entered in a suspense account.

A detailed examination of the books was undertaken, and the following matters were uncovered:

Purchases returns of GH¢19,350 were credited to sales returns as GH¢11,175, and the corresponding entry was correctly entered.
An addition error was discovered in the sales returns day book, resulting in an understatement of GH¢1,600.
An amount of GH¢245 cash received from a customer was debited to the customer’s account and credited to the cash account.
The cash at hand balance of GH¢5,350 as at 30 June 2018 was omitted from the trial balance in error.
Building repairs of GH¢4,300 were undertaken during the month ended 30 June 2018. The amount was paid by cheque, and GH¢1,800 was incorrectly credited to the building account.
On 1 January 2017, rent for the year ended 31 December 2017 of GH¢22,500 was paid and accounted for correctly. Nene Koba’s landlord has indicated that rent for 2018 will increase to GH¢30,000, but no invoice has been received. Nene Koba, however, has not paid any rent for 2018 and has made no accounting entry for it because no invoice was received.
A credit sale of GH¢12,500 (excluding tax) was recorded by debiting sales with GH¢12,500 and crediting receivable with GH¢12,500. The tax rate is 15%.

Required:

i) Prepare journal entries with appropriate narrations necessary to correct the above errors. (8 marks)
ii) Prepare the Suspense account. (2 marks)

b) Ama, Baah, and Cain are in partnership, providing management services, sharing profits in the ratio 5:3:2 after charging annual salaries of GH¢6,000 each. Current accounts are not maintained. On 30 June 2019, Ama retired, and Doh was admitted into the partnership. Doh is entitled to 30% of the profits of the new partnership, with the balance being shared between Baah and Cain.

Required:

Prepare the Statement of Profit or Loss account and the Appropriation account for the year ended 30 June 2019. (10 marks)

Answer

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Tags: Correction of Errors, Journal Entries, Sole Trader, Suspense account
Level: Level 1

Topic: Correction of errors
Series: NOV 2019

FA – May 2014 – L1 – SA – Q2 – Correction of Errors

Suspense account entries and explanation of the effects of errors on accounts and profit.

Question

On investigation, the following errors were discovered:

You are required to:

a. Show the Suspense Account as raised by the bookkeeper with the adjusting entries. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Adjustments, Correction of Errors, Suspense account
Level: Level 1

Topic: Correction of errors
Series: MAY 2014

FA – Nov 2014 – L1 – SB – Q2 – Correction of Errors

Preparing journal entries, suspense account, and net profit adjustment based on detected errors.

Question

Required:

Answer

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Tags: Correction of Errors, Journal Entries, Profit Adjustment, Suspense account
Level: Level 1

Topic: Correction of errors
Series: NOV 2014

FA – Nov 2014 – L1 – SA – Q15 – Bank Reconciliation

Identifying the correct overdrawn bank balance after corrections in cash book entries.

Question

A. N66,700 O/D
B. N67,500 O/D
C. N70,500 O/D
D. N71,600 O/D
E. N72,500 O/D

Answer

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Tags: Bank Reconciliation, Cash Book, Correction of Errors, Overdrawn Balance
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2014

FA – May 2016 – L1 – SB – Q1c – Correction of Errors

Prepare journal entries to correct errors in the accounts.

Question

The following balances were extracted from the books of Arewa & Sons on December 31,
2015.

You are required to

i. Prepare journal entries to correct the errors.
ii. Prepare the trial balance after effecting the corrections.

Answer

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Tags: Correction of Errors, Financial Statements, Journal Entries
Level: Level 1

Topic: Correction of errors
Series: MAY 2016

FA – MAY 2015 – L1 – SA – Q3 – Correction of Errors

Determine the journal entries to correct an error involving telephone and motor vehicle expenses.

Question

Answer

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Tags: Correction of Errors, Motor Vehicle, Telephone Expenses
Level: Level 1

Topic: Correction of errors
Series: MAY 2015

FA – April 2022 – L1 – Q1 – Preparation of Partnership accounts

Explanation of the importance of management accounts and correction of errors in a trial balance using journal entries and suspense account.

Question

Required:
Explain to the owner of Aspen Enterprise why Management Accounts is important.
(10 marks)

The total of the purchase account was undercast by GHȼ2,000.
Cash sales of GHȼ2,470 were recorded by debiting sales with GHȼ2,470 and crediting cash with GHȼ6,430.
Mr. Samson, whose debt was the subject of a specific provision for bad debt, paid his debt of GHȼ1,080 in full. The only entry made for this transaction was to credit receivables with GHȼ1,080.
An invoice for rates for GHȼ2,250 was found behind the bookkeeper’s desk. The invoice had not been accounted for.
The total of the sales returns day book was overcast by GHȼ1,280.
Discounts received of GHȼ840 was recorded by crediting receivables and debiting discounts received.
A new piece of machinery valued at GHȼ24,300 was written off to repairs in error. The depreciation policy of Naana Akyeaa is to depreciate machinery by 10% on a straight-line basis. The sole trader charges a full year’s depreciation in the year of purchase and none in the year of sale.

Required:
i) Prepare journal entries, with the appropriate narratives, necessary to correct the above errors.
(6 marks)
ii) Prepare a Suspense Account.
(4 marks)

Answer

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Tags: Correction of Errors, Journal Entries, Management Accounts, Suspense account
Level: Level 1

Topic: Preparation of Partnership accounts
Series: APR 2022

FA – Nov 2019 – L1 – Q2 – Correction of errors

Calculate specific financial ratios, discuss the advantages and disadvantages of ratio analysis, and explain the responsibilities of directors and auditors towards financial statements.

Question

A detailed examination of the books was undertaken, and the following matters were uncovered:

Purchases returns of GH¢19,350 were credited to sales returns as GH¢11,175, and the corresponding entry was correctly entered.
An addition error was discovered in the sales returns day book, resulting in an understatement of GH¢1,600.
An amount of GH¢245 cash received from a customer was debited to the customer’s account and credited to the cash account.
The cash at hand balance of GH¢5,350 as at 30 June 2018 was omitted from the trial balance in error.
Building repairs of GH¢4,300 were undertaken during the month ended 30 June 2018. The amount was paid by cheque, and GH¢1,800 was incorrectly credited to the building account.
On 1 January 2017, rent for the year ended 31 December 2017 of GH¢22,500 was paid and accounted for correctly. Nene Koba’s landlord has indicated that rent for 2018 will increase to GH¢30,000, but no invoice has been received. Nene Koba, however, has not paid any rent for 2018 and has made no accounting entry for it because no invoice was received.
A credit sale of GH¢12,500 (excluding tax) was recorded by debiting sales with GH¢12,500 and crediting receivable with GH¢12,500. The tax rate is 15%.

Required:

i) Prepare journal entries with appropriate narrations necessary to correct the above errors. (8 marks)
ii) Prepare the Suspense account. (2 marks)

Required:

Prepare the Statement of Profit or Loss account and the Appropriation account for the year ended 30 June 2019. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Correction of Errors, Journal Entries, Sole Trader, Suspense account
Level: Level 1

Topic: Correction of errors
Series: NOV 2019

Question Tag: Correction of Errors

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FA – May 2014 – L1 – SA – Q2 – Correction of Errors

Suspense account entries and explanation of the effects of errors on accounts and profit.

FA – Nov 2014 – L1 – SB – Q2 – Correction of Errors

Preparing journal entries, suspense account, and net profit adjustment based on detected errors.

FA – Nov 2014 – L1 – SA – Q15 – Bank Reconciliation

Identifying the correct overdrawn bank balance after corrections in cash book entries.

FA – May 2016 – L1 – SB – Q1c – Correction of Errors

Prepare journal entries to correct errors in the accounts.

FA – MAY 2015 – L1 – SA – Q3 – Correction of Errors

Determine the journal entries to correct an error involving telephone and motor vehicle expenses.

FA – April 2022 – L1 – Q1 – Preparation of Partnership accounts

Explanation of the importance of management accounts and correction of errors in a trial balance using journal entries and suspense account.

FA – Nov 2019 – L1 – Q2 – Correction of errors

Calculate specific financial ratios, discuss the advantages and disadvantages of ratio analysis, and explain the responsibilities of directors and auditors towards financial statements.

FA – May 2014 – L1 – SA – Q2 – Correction of Errors

Suspense account entries and explanation of the effects of errors on accounts and profit.

FA – Nov 2014 – L1 – SB – Q2 – Correction of Errors

Preparing journal entries, suspense account, and net profit adjustment based on detected errors.

FA – Nov 2014 – L1 – SA – Q15 – Bank Reconciliation

Identifying the correct overdrawn bank balance after corrections in cash book entries.

FA – May 2016 – L1 – SB – Q1c – Correction of Errors

Prepare journal entries to correct errors in the accounts.

FA – MAY 2015 – L1 – SA – Q3 – Correction of Errors

Determine the journal entries to correct an error involving telephone and motor vehicle expenses.

FA – April 2022 – L1 – Q1 – Preparation of Partnership accounts

Explanation of the importance of management accounts and correction of errors in a trial balance using journal entries and suspense account.

FA – Nov 2019 – L1 – Q2 – Correction of errors

Calculate specific financial ratios, discuss the advantages and disadvantages of ratio analysis, and explain the responsibilities of directors and auditors towards financial statements.

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Question Tag: Correction of Errors

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FA – May 2014 – L1 – SA – Q2 – Correction of Errors

Suspense account entries and explanation of the effects of errors on accounts and profit.

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FA – Nov 2014 – L1 – SB – Q2 – Correction of Errors

Preparing journal entries, suspense account, and net profit adjustment based on detected errors.

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FA – Nov 2014 – L1 – SA – Q15 – Bank Reconciliation

Identifying the correct overdrawn bank balance after corrections in cash book entries.

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FA – May 2016 – L1 – SB – Q1c – Correction of Errors

Prepare journal entries to correct errors in the accounts.

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FA – MAY 2015 – L1 – SA – Q3 – Correction of Errors

Determine the journal entries to correct an error involving telephone and motor vehicle expenses.

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FA – April 2022 – L1 – Q1 – Preparation of Partnership accounts

Explanation of the importance of management accounts and correction of errors in a trial balance using journal entries and suspense account.

You're reporting an error for "FA – April 2022 – L1 – Q1 – Preparation of Partnership accounts"

FA – Nov 2019 – L1 – Q2 – Correction of errors

Calculate specific financial ratios, discuss the advantages and disadvantages of ratio analysis, and explain the responsibilities of directors and auditors towards financial statements.

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FA – May 2014 – L1 – SA – Q2 – Correction of Errors

Suspense account entries and explanation of the effects of errors on accounts and profit.

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FA – Nov 2014 – L1 – SB – Q2 – Correction of Errors

Preparing journal entries, suspense account, and net profit adjustment based on detected errors.

You're reporting an error for "FA – Nov 2014 – L1 – SB – Q2 – Correction of Errors"

FA – Nov 2014 – L1 – SA – Q15 – Bank Reconciliation

Identifying the correct overdrawn bank balance after corrections in cash book entries.

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FA – May 2016 – L1 – SB – Q1c – Correction of Errors

Prepare journal entries to correct errors in the accounts.

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FA – MAY 2015 – L1 – SA – Q3 – Correction of Errors

Determine the journal entries to correct an error involving telephone and motor vehicle expenses.

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FA – April 2022 – L1 – Q1 – Preparation of Partnership accounts

Explanation of the importance of management accounts and correction of errors in a trial balance using journal entries and suspense account.

You're reporting an error for "FA – April 2022 – L1 – Q1 – Preparation of Partnership accounts"

FA – Nov 2019 – L1 – Q2 – Correction of errors

Calculate specific financial ratios, discuss the advantages and disadvantages of ratio analysis, and explain the responsibilities of directors and auditors towards financial statements.

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