Level: Easy
Easy Worked Examples: Correction of Errors
This set has six easy examples of errors that do not affect the trial balance, each corrected with one General Journal entry after the trial balance is prepared. Each example focuses on one concept and uses small, round RM figures.
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Example 1: Error of Omission
Question
Solution plan
This is an error of omission: the transaction was never recorded, so both the debit and credit are missing. For a credit sale: debit the debtor's account (Rahim) because he owes us, and credit the Sales account because revenue increases. Record the full RM500 entry.
| Date | Particulars | Debit (RM) | Credit (RM) |
|---|---|---|---|
| 31 Dec 2023 | Rahim Account | 500 | |
| Sales | 500 | ||
| (To record the omitted credit sale to Mr Rahim) | |||
| Total | 500 | 500 |
Answer
Correcting entry: Debit Rahim Account RM500 and Credit Sales Account RM500. An error of omission does not affect the agreement of the trial balance because both the debit and the credit were left out.
Where marks are usually lost
Example 2: Error of Commission
Question
Solution plan
This is an error of commission: the correct amount was posted to the wrong account of the same class. The Cash account is fine. The mistake: Aisyah was credited when Aminah should have been. Cancel the wrong credit by debiting Aisyah RM300, and record the correct credit by crediting Aminah RM300.
| Date | Particulars | Debit (RM) | Credit (RM) |
|---|---|---|---|
| 31 Dec 2023 | Aisyah Account | 300 | |
| Aminah Account | 300 | ||
| (To correct cash received from Aminah wrongly credited to Aisyah's account) | |||
| Total | 300 | 300 |
Answer
Correcting entry: Debit Aisyah Account RM300 and Credit Aminah Account RM300. Aminah's balance is reduced by RM300 (correct) and Aisyah's balance returns to its original position. The trial balance stays balanced before and after correction.
Where marks are usually lost
Example 3: Error of Principle
Question
Solution plan
This is an error of principle: a non-current asset was recorded in the wrong class of account (Purchases, i.e. goods bought for resale). The Cash account is fine. Remove the amount from Purchases by crediting it RM800, and place it in the Office Equipment account by debiting it RM800.
| Date | Particulars | Debit (RM) | Credit (RM) |
|---|---|---|---|
| 31 Dec 2023 | Office Equipment | 800 | |
| Purchases | 800 | ||
| (To correct the printer purchase wrongly recorded as Purchases) | |||
| Total | 800 | 800 |
Answer
Correcting entry: Debit Office Equipment Account RM800 and Credit Purchases Account RM800. Purchases (an expense element) falls by RM800 and the non-current asset rises by RM800. Net profit will increase because the overstated Purchases is removed.
Where marks are usually lost
Example 4: Error of Original Entry
Question
Solution plan
This is an error of original entry: a wrong figure was recorded, but the debit and credit accounts are correct and the amounts are equal. Find the difference: RM900 − RM90 = RM810. Record only the shortfall: debit Zaki Account RM810 and credit Sales Account RM810.
| Date | Particulars | Debit (RM) | Credit (RM) |
|---|---|---|---|
| 31 Dec 2023 | Zaki Account | 810 | |
| Sales | 810 | ||
| (To correct the credit sale to Mr Zaki recorded as RM90 instead of RM900) | |||
| Total | 810 | 810 |
Answer
Correcting entry: Debit Zaki Account RM810 and Credit Sales Account RM810. After correction, both the Zaki and Sales balances become RM900 (RM90 + RM810). The trial balance stays balanced because both sides were recorded with the same wrong amount.
Where marks are usually lost
Example 5: Error of Complete Reversal
Question
Solution plan
The correct entry should be: debit Cash, credit Salmah. Because it was completely reversed, we must (i) cancel the wrong entry and (ii) record the correct entry, so the amount is doubled. So: debit Cash Account RM500 and credit Salmah Account RM500 (RM250 to cancel + RM250 correct).
| Date | Particulars | Debit (RM) | Credit (RM) |
|---|---|---|---|
| 31 Dec 2023 | Cash Account | 500 | |
| Salmah Account | 500 | ||
| (To correct cash received from Salmah recorded in complete reverse; amount doubled) | |||
| Total | 500 | 500 |
Answer
Correcting entry: Debit Cash Account RM500 and Credit Salmah Account RM500. The amount is doubled (RM250 to cancel the reversed entry, RM250 to record the correct entry). The trial balance stays balanced because debit equals credit.
Where marks are usually lost
Example 6: Compensating Errors
Question
Solution plan
Purchases undercast by RM100 means the debit side is RM100 too low and must be increased: debit Purchases RM100. Sales undercast by RM100 means the credit side is RM100 too low and must be increased: credit Sales RM100. These errors offset each other, so the original trial balance still balanced, but the individual balances are wrong and must be corrected.
| Date | Particulars | Debit (RM) | Credit (RM) |
|---|---|---|---|
| 31 Dec 2023 | Purchases | 100 | |
| Sales | 100 | ||
| (To correct Purchases and Sales each undercast by RM100 which compensated each other) | |||
| Total | 100 | 100 |
Answer
Correcting entry: Debit Purchases Account RM100 and Credit Sales Account RM100. After correction, Purchases and Sales each rise by RM100 to their correct values. Net effect on profit: Sales up RM100 and Purchases up RM100, so gross profit (and net profit) is unchanged.
Where marks are usually lost
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