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Answers To Questions in The Workbook

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36 views2 pages

Answers To Questions in The Workbook

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Uploaded by

Mala Varma
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Cambridge IGCSETM and O Level Accounting

Answers to Cambridge IGCSETM and O Level


Accounting Workbook
7 Correction of errors
1 A
2 C
3 C
4 B
5 C
6
a Any two of the following:
• Arithmetical errors – these would include errors of addition and subtraction, e.g. an
error in addition within an account or within the trial balance.
• Using one figure for a debit entry of a transaction and another figure for the credit
entry.
• Entering only one aspect of a transaction (e.g. making a debit entry but not the
corresponding credit entry)
• Entering a transaction twice on the same side of an account (e.g. entering two debits
instead of one debit and one credit)
b Error of complete reversal occurs when the correct amounts are used but double entries are
made on the wrong side of the accounts concerned. For example, Mason paid us $350 by
cheque. We debited Mason’s account and credited bank account with the amount of $350,
instead of debiting bank account and crediting Mason’s account with that amount.
c Error of principle is when the correct amount is entered, both debit and credit, but one of
the entries is made in an account belonging to a different class. For example, repairs to a
motor vehicle are debited to the motor vehicle account.
7

Error Effect on profit for the year


Increase Decrease No effect
$ $
1. $700
2. $426
3 $800
4. $1 300

Cambridge IGCSE and O Level Accounting Teacher’s Guide © June Baptista 2018 1
Answers to Workbook

8
Profit for the year is overstated ✓
Profit for the year is understated
Current assets are overstated ✓
Current assets are understated
Non-current assets are understated
Non-current assets are overstated

9 a Error of original entry


b
Debit Credit
$ $
Nelly 180
Purchases 180

10 Two of the following reasons:


• To enable draft financial statements to be prepared
• To enable the correction of errors to be recorded using a ledger account
• To be able to see easily if the balance on the account is cleared, suggesting that all
errors have been found
11 a
Debit entry $ Credit entry $
Sales account 200 Ted account 200

b
Suspense account
$ $
Difference on trial balance 512 Heat and light 612
Insurance 100 ___
612 612

c The entries made to the suspense account clear the difference on the trial balance,
which will now balance. However there may still be errors which do not affect the
trial balance.

Cambridge IGCSE and O Level Accounting Teacher’s Guide © June Baptista 2018 2

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