trial balance errors;
Errors that do not cause imbalance of the trial balance.
As it was said before, preparing a trial balance is an effective means to prevent some bookkeeping mistakes, and the balance of the trial balance provides the assurance that:
1- From the debtor and creditor sides, all transactions transferred from the newspaper to the general ledger are equal.
2- The calculations related to the balance of the general ledger accounts are correct.
3- The sum of the columns of the trial level has been calculated correctly. Despite this, errors are not detected through trial balance. Examples of such mistakes are as follows:
omission
This mistake occurs when one or more transactions are not registered in the newspaper book due to reasons such as lack of primary documents. For example, some items of goods sales are not registered in the newspaper book and as a result are not transferred to the general ledger accounts.
Incorrect analysis of a transaction
In the analysis of a transaction, the accounts that are debited or credited may not be determined correctly and an item is transferred to an inappropriate account. For example, the cost of repairing a car is mistakenly transferred to the relevant asset account, such mistakes are also called fundamental mistakes.
Registering a transaction for a lower or higher amount in the journal
For example, it is possible to register a purchase in the amount of 200,000 Rials after deducting a 5% commercial discount. Instead of registering a transaction in the amount of 190,000 Rials in the newspaper, 200,000 Rials should be the criterion for registration.
Not transferring both sides of a journal entry to the general ledger accounts
Although this mistake has no effect on the balance of the trial balance, as it was said before, if a four-column trial balance is prepared, the turnover figure of the newspaper office will not be the same as the turnover figure of the general ledger accounts.
Error in quoting items
This mistake occurs when a transaction is correctly recorded in the newspaper, but the correct amount is the debtor or creditor. The debtor or creditor of the account or other accounts may be mistakenly transferred to the account or other accounts, for example, an item that was correctly debited to the fund account in the newspaper may be mistakenly debited to the office furniture account instead of the fund account.
Mutual and neutralizing mistakes
Sometimes the effect of one mistake is neutralized by the occurrence of another mistake by exactly the same amount, for example, the balance of an asset account in the general ledger is mistakenly calculated to be 200,000 Rials more than it actually is, and at the same time, the balance of a debt account is also added to the same amount, and this Two mistakes cancel each other out.
—— Many obvious mistakes are discovered in the course of work and as a result of receipts and payments, comparison of documents and accounts and processing of accounts, but there is also a possibility that a mistake will remain undiscovered for a long time.
Mehdi Koh Soltani (Accounting; Financial and Tax Consultant; Rayan Teraz, Tabriz):
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This post is written by NazliDm