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In solving Test Question 4 of Chapter 16, page 111 on the free lecture notes (ACCA-Paper-F3-notes-December-2011-OpenTuition.pdf), I do not understand why error (2) “The total of the purchase return journal was undercast by $1,000? was not corrected in the payables ledger. Shouldn’t this be debited to the payables ledger to reduce liability?
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Hi there,
This is one of the trickiest topics in F3; most students get stuck with these questions at one point. And not because it’s intellectually challenging, but because of the unfamiliar jargon.
Remember this, there are two things to deal with: (1) the control account and (2) ‘the other thing.’ The other thing can be called ‘the list of balances,’ ‘the memoranda accounts,’ ‘the individual ledger accounts,’ or whatever they feel like calling it in the next question they write. But it is always the other thing. I use the easiest-to-understand-term, the list of balances.
So, individual transactions are recorded in the daybooks. Then:
Totals always go to the control account, and the details to the list of balances.
When the question says, ‘undercast,’ this is means the daybook TOTAL is wrong, so it only affects the control account. There was no mention that the details were incorrectly posted to the list of balances.
Hope that helps–it’s much easier to explain this with a whiteboard and diagrams.
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