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Correction of error

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Correction of error

  • This topic has 8 replies, 2 voices, and was last updated 2 years ago by John Moffat.
Viewing 9 posts - 1 through 9 (of 9 total)
  • Author
    Posts
  • June 3, 2023 at 11:46 am #685940
    weekly
    Participant
    • Topics: 38
    • Replies: 39
    • ☆☆

    Which of the following types of error is never indicated when a trial balance is extracted?

    Option
    1. Errors of commission
    2. Errors of omission
    3. Errors of principle
    4. Transposition errors

    The book said that the correct answer is error of principle. But do not understand why. If a revenue item is recorded as an expense item. The trial balance will indicate this type of error. I selected error of commission because if an asset was recorded as an expense the error will not be indicated by the trial balance

    June 3, 2023 at 3:10 pm #685947
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    Suppose they buy a new asset but instead of debiting the asset account they instead debit an expense account. This is an error of principle but the trial balance will still balance because they have still had a debit and a credit.

    June 3, 2023 at 4:21 pm #685951
    weekly
    Participant
    • Topics: 38
    • Replies: 39
    • ☆☆

    Yes I’m sorry it’s an error of principle. But if I debited an expense account instead of another expense account. This will be an error of commission and it will still not be shown in a trial balance right

    June 4, 2023 at 12:45 pm #685975
    weekly
    Participant
    • Topics: 38
    • Replies: 39
    • ☆☆

    Please help me I’m still a bit confused about this question.

    I’m still searching on that. If an income is treated as an expense. It’s an error of principle. And this type of error will create an inequality between the total debits and the total credits in a trial balance. So the trial balance do indicate an error of principle.

    June 4, 2023 at 3:16 pm #685988
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    Your first post is correct.

    For your second post, provided that the debit entry equals the credit entry then even if one of the accounts is the wrong account, the trial balance will still balance.

    June 4, 2023 at 4:58 pm #685996
    weekly
    Participant
    • Topics: 38
    • Replies: 39
    • ☆☆

    So the answer will thus be error of commission?

    June 5, 2023 at 6:48 am #686015
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    No it is an error of principle.

    An error of commission is when it is posted to the wrong account. Even if the post is to the wrong side of the account then it is still an error of commission but the trial balance will not balance.

    An error of principle is like this one, where (as in your example) it is (for example) posted to the debit side of an expense account when it should have been posted to the debit side of an asset account. In that case the trial balance will still balance.

    June 5, 2023 at 7:56 am #686029
    weekly
    Participant
    • Topics: 38
    • Replies: 39
    • ☆☆

    Ok than you Sir

    June 5, 2023 at 4:42 pm #686069
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You are welcome 🙂

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Viewing 9 posts - 1 through 9 (of 9 total)
  • The topic ‘Correction of error’ is closed to new replies.

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