{"id":2980,"date":"2023-10-04T08:45:56","date_gmt":"2023-10-04T08:45:56","guid":{"rendered":"http:\/\/localhost\/ecole9ja\/?p=2980"},"modified":"2023-10-04T08:53:08","modified_gmt":"2023-10-04T08:53:08","slug":"week-2-ss2-first-term-financial-accounting-notes","status":"publish","type":"post","link":"https:\/\/ecolebooks.com\/nigeria\/posts\/week-2-ss2-first-term-financial-accounting-notes\/","title":{"rendered":"Week 2 – SS2 First Term Financial Accounting Notes"},"content":{"rendered":"

FINANCIAL ACCOUNTING
\n<\/strong><\/p>\n

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
WEEKS<\/td>\nTOPICS<\/td>\n<\/tr>\n
1<\/td>\nREVISION<\/td>\n<\/tr>\n
2<\/td>\nAccounting Errors<\/p>\n
    \n
  • \n
    Definition, types of errors (Book-keeping errors and extraction errors)\n<\/div>\n<\/li>\n
  • \n
    Errors the trial balance cannot disclose\n<\/div>\n<\/li>\n
  • \n
    Errors the trial balance can disclose\n<\/div>\n<\/li>\n
  • \n
    Suspense Account <\/div>\n<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
3<\/td>\nCorrections of errors with journal proper, working exercises on corrections of errors with journal proper<\/p>\n
    \n
  • \n
    Effects of errors on profit declared<\/div>\n<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
4<\/td>\nControl Account and sel-balance ledger<\/p>\n
    \n
  • \n
    Reasons for control account\n<\/div>\n<\/li>\n
  • \n
    Limitations of control account\n<\/div>\n<\/li>\n
  • \n
    Sales ledger of control account\n<\/div>\n<\/li>\n
  • \n
    Meaning, uses\/purpose, definitions of terminologies of contra settlement\n<\/div>\n<\/li>\n
  • \n
    Format and working exercises<\/div>\n<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
5<\/td>\nPurchases ledger control account<\/p>\n
    \n
  • \n
    Meaning, uses\/purpose, definition of terms format and working exercise<\/div>\n<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
6<\/td>\nManufacturing account \u2013 reasons, terminologies, format and working exercise<\/td>\n<\/tr>\n
7<\/td>\nManufacturing account \u2013 trading, profit and loss account and balance sheet with working exercises<\/td>\n<\/tr>\n
8<\/td>\nManufacturing account – treatment of manufacturing profit (market value) with trading, profit and loss account and balance sheet <\/td>\n<\/tr>\n
9.<\/td>\nIntroduction to partnership accounts \u2013 meaning, types of partners and partnership, format, partnership deeds\/agreement and types of account and terminologies <\/td>\n<\/tr>\n
10<\/td>\nPartnership accounts \u2013 working exercises on appropriation account, current account, capital account and balance sheet<\/td>\n<\/tr>\n
11<\/td>\nREVISION<\/td>\n<\/tr>\n
12<\/td>\nEXAMINIATION<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

\u00a0
\n\u00a0
\n\u00a0
\n\u00a0
\n\u00a0WEEK TWO<\/p>\n

1.0 ACCOUNTING ERRORS
\n<\/h2>\n

1.1 ERRORS NOT AFFECTING THE TRIAL BALANCE.
\nThis category of error does not prevent the trial balance to talk from balancing, meaning that inspite of their existence in the trial balance (if any), the trial balance totals will agree. The errors are as follows:<\/p>\n

    \n
  1. Error of omission\n<\/li>\n
  2. Error of commission\n<\/li>\n
  3. Error of original entry\n<\/li>\n
  4. Error of transposition\n<\/li>\n
  5. Error of reversal of entry\n<\/li>\n
  6. Error of principle\n<\/li>\n
  7. Compensating error\n<\/li>\n<\/ol>\n

    ERROR OF OMISSION: This error when there is a complete omission of a transaction from the ledger. It therefore, means that both the debit and the credit entries of a transaction were not recorded in the books. A common reason for this is the loss or misplacement of the source document for the transaction involved.
    \nERROR OF COMMISSION: This error occurs when a transaction is entered in the wrong account within the correct class of accounts. Put simply, the error occurs through the entry made in the correct class of account but affecting a person different from the person intended. An instance is when an amount received from X<\/strong> is wrongly credited to the personal account of Y<\/strong> instead that of X<\/strong>.
    \nERROR OF ORIGINAL ENTRY: this error occurs whenever the double entry of a transaction is correctly made, but the original account amount of the transaction is wrongly recorded. It means a wrong amount entirely different from the correct amount is debited and credited to the appropriate accounts. An example is when a credit sale is recorded in the sales day book at a wrong amount and the wrong amount debited to the buyers account and credited to the sales account.
    \nERROR OF TRANSPOSITION: This is the error committed whenever a mistake is made by changing the arrangement of a transaction. For example, if the amount #556 and posted wrongly taken as #565 and posted into the ledger as such.
    \nERROR OF REVERSAL OF ENTRY: This error occurs when entry for a transaction resulting in situation where an account that should have been debited is credited and another account that should have been credited is debited. For instance, if cash paid to creditor is debited in cash account and the same amount is credited to the creditor’s account.
    \nCOMPENSATING ERROR: This type of error occurs when an error of error occurs when an error in one account is cancelled out by another error in another account. It may occur in the form of overstatement or understatement of amounts in accounts. For example, if sales account is understated by #1000 and rent and rates account is also understated by #1000.<\/p>\n

    \u00a0<\/p>\n

    1.2 ERRORS THAT AFFECT THE TRIAL BALANCE
    \n<\/h3>\n

    This is the category of errors that cause disagreement between the totals of the two sides of the trial balance. Some of these errors are as follows:<\/p>\n

      \n
    1. Arithmetic errors committed in balancing ledger accounts\n<\/li>\n
    2. One sided omission\n<\/li>\n
    3. Errors in transfers of totals of subsidiary book\n<\/li>\n
    4. Two entries on the same side\n<\/li>\n
    5. Under-casting or overcasting of balances\n<\/li>\n
    6. Mis-posting of figures to the account\n<\/li>\n
    7. Trial balance errors\n<\/li>\n<\/ol>\n

      1.3 CORRECTION OF ERRORS
      \n<\/h3>\n

      There are two approaches available to correct errors in the accounts. The approach to use at any particular time depends on the effect of the error on the trial balance.
      \nFor those errors that do not affect the agreement of the total of the two sides of the trial balance, there will always be two affected accounts and on which the errors will be corrected and for those errors that affect the agreement of the two sides of the trial balance, only one ledger account will be affected thereby requiring another account for the correction of the error(s).
      \nThis other necessary account is called the suspense account. The suspense account is an account created for the correction of errors to be effected. It is used to record the net difference in trial balance totals pending the rotation and correction of the errors causing a difference in the trial balance. Errors are corrected through the use of journal. <\/p>\n

      LOCATION OF ERRORS
      \n<\/h3>\n

      Generally, errors not affecting the agreement of the trial balance are usually detected through complaints from affected third parties such as customers, suppliers, while those that affect the trial balance totals are more easily discovered. However, the following steps should be taken to locate and correct either type of balance.<\/p>\n

        \n
      1. Re \u2013 compute the addition of the trial balance\n<\/li>\n
      2. Check for any omission in the trial balance\n<\/li>\n
      3. Ensure that the ledger balances are appearing on the correct side of the trial balance, that is assets, expenses, purchases and drawing should be on debit side, while income, capital, sales and liabilities should appear on the credit sale.\n<\/li>\n
      4. Check for any omission in the trial balance\n<\/li>\n
      5. Check the arithmetical calculation in the ledger\n<\/li>\n
      6. Check the double entries needed in the ledger\n<\/li>\n
      7. Carefully observe the entries in the ledger to see if a figure close to the difference in the trial balance can be found.\n<\/li>\n<\/ol>\n

        \u00a0Illustration I
        \nThe trial balance of IGI Nigeria Limited on 31st<\/sup> Dec., 201x showed a difference of #3,090. A thorough review of the ledger revealed the following errors.<\/p>\n

          \n
        1. A debit note of #1,260 received from a customer had posted to the wrong side of his account\n<\/li>\n
        2. The sum of #360 in a creditor’s account was omitted from the balance of creditors\n<\/li>\n
        3. The payment side of the cash account had been undercast by #1,950\n<\/li>\n
        4. An item if asset purchased for #2,880 had been debited to repairs.\n<\/li>\n
        5. Mr. Munir, whose debt of #1,560 had been written off paid during the year. His personal account credited but no corresponding entry was made.\n<\/li>\n
        6. The total of the sales day book had been carried forward as #6,462, whereas the corrected amount was #7,542.\n<\/li>\n<\/ol>\n

          You are required to show the following:<\/p>\n

            \n
          1. Journal entries necessary to correct the errors\n<\/li>\n
          2. Suspense account duty balanced
            \n\n\n\n\n\n\n\n\n\n\n
            \u00a0<\/td>\n\u00a0<\/td>\nDR<\/td>\nCR<\/td>\n<\/tr>\n
            \u00a0<\/td>\n\u00a0<\/td>\n#<\/td>\n#<\/td>\n<\/tr>\n
            1<\/td>\nSuspense account dr.
            \nCr. Debtor’s account
            \nBeing correction of a debit note wrongly posted to the wrong side of a customer’s account<\/td>\n            		1,260\n<\/td>\n\n\u00a01,260<\/td>\n<\/tr>\n
            2<\/td>\nSuspense account dr.
            \nCr. Creditor’s account
            \nBeing entry in respect of omitted creditor’s balance<\/td>\n            		360\n<\/td>\n\n\u00a0360<\/td>\n<\/tr>\n
            3<\/td>\nSuspense account dr.
            \nCr. Cash account
            \nBeing correction of the undercasting of cash book payment<\/td>\n            		1,950<\/td>\n\n\u00a01,950<\/td>\n<\/tr>\n
            4<\/td>\nAsset account dr.
            \nCr. Repair account
            \nBeing correction of the purchase of assets wrongly debited to repair account<\/td>\n            		2880<\/td>\n\n\u00a02880<\/td>\n<\/tr>\n
            5<\/td>\nCash account dr.
            \nCr. Suspense account
            \nBeing entry of recovered debt omitted from cash account<\/td>\n            		1560<\/td>\n\n\u00a01560<\/td>\n<\/tr>\n
            6<\/td>\nSuspense account dr.
            \nCr. Sales account
            \nBeing correction of wrong amount carried forward on page of sales day book<\/td>\n            		1.080<\/td>\n\n\u00a01,080<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

            \u00a0<\/li>\n<\/ol>\n

            \"\"\/\"\"\/DR\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0SUSPENSE ACCOUNT\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0CR
            \n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Trial balance differences \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a03090
            \n\"\"\/\"\"\/Creditors \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0360\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Cash\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a01560
            \nCash \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a01950
            \nSales \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a01080
            \n\"\"\/\"\"\/Debtors \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a01260
            \n\"\"\/\"\"\/
            \n\t\"\"\/\"\"\/\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a04,650\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a04,650<\/p>\n

            \u00a0
            \n\u00a0CFAO Enterprises book-keeping extracted a trial balance on June 30, 2009.He discounted the total of the debit side balance to be more than the credit side by #756.25 and transferred this figure to a suspense account.
            \nHowever, the cause of this disagreement of the two sides were discovered to be because of the following:<\/p>\n

              \n
            1. A credit note sent to JK Ogun for#206.25 had been entered in the returns inward book at #195 and posted to his account as #195.\n<\/li>\n
            2. Commission received account amounting to #1,136.80 had been omitted from trial balance even though it was duly recorded in the cash book and posted into the ledger\n<\/li>\n
            3. Equipment sold for #1,250 had been credited to the sales account\n<\/li>\n
            4. The purchases day book had been overcast by #250\n<\/li>\n
            5. Goods of about #250 sold to Omot had been credited to his account\n<\/li>\n
            6. Goods with the value of #130.63 returned by Desuola had been duly credited to his personal account but no entry was made in the returns inward account.\n<\/li>\n<\/ol>\n

              You are required to:<\/p>\n

                \n
              1. Prepare the journal entries necessary to correct these errors\n<\/li>\n
              2. Prepare the suspense account\n<\/li>\n<\/ol>\n

                \u00a0
                \n\u00a0Solution<\/p>\n\n\n\n\n\n\n\n\n\n\n
                \u00a0<\/td>\n\u00a0<\/td>\nDR<\/td>\nCR<\/td>\n<\/tr>\n
                \u00a0<\/td>\n\u00a0<\/td>\n#<\/td>\n#<\/td>\n<\/tr>\n
                1<\/td>\nDr. returns inwards account
                \nCr. J.K Ogun account
                \nBeing correction of compensating error<\/td>\n                		11.25\n<\/td>\n\n\u00a011.25<\/td>\n<\/tr>\n
                2<\/td>\nDr. suspense account
                \nCr. Commission received account
                \nBeing correction of error of extraction from ledger to the trial balance <\/td>\n                		1136.80\n<\/td>\n\n\u00a01136.80<\/td>\n<\/tr>\n
                3<\/td>\nDr. Sales account
                \nCr. Equipment account
                \nBeing correction of error of principle <\/td>\n                		1250<\/td>\n\n\u00a01,250<\/td>\n<\/tr>\n
                4<\/td>\nDr. suspense account
                \nCr. Purchases account
                \nBeing correction of the overcast in the purchase book<\/td>\n                		250<\/td>\n\n\u00a0250<\/td>\n<\/tr>\n
                5<\/td>\nDR. Omot account
                \nCr. Suspense account
                \nBing correction of error of posting of items to the wrong side<\/td>\n                		500<\/td>\n\n\u00a0500<\/td>\n<\/tr>\n
                6<\/td>\nDr. Returns inward account
                \nCr. Suspense account
                \nBeing correction of partial error on the posting of returns inward items<\/td>\n                		130.65<\/td>\n\n\u00a0130.65<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

                \u00a0\"\"\/\"\"\/DR\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0SUSPENSE ACCOUNT\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0CR
                \nCommission received \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a01136.68\u00a0\u00a0\u00a0\u00a0Bal b\/f\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0756.25
                \n\"\"\/\"\"\/purchases \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0250\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Omot\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0500
                \n\"\"\/\"\"\/\"\"\/\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Returns Inward\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0130.63
                \n\"\"\/\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a01,386.88
                \n\"\"\/
                \n\t\t\"\"\/\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a01,386.88<\/p>\n

                \u00a0
                \n\u00a0EFFECT OF ERRORS ON PROFIT AND LOSS ACCOUNT AND BALANCE SHEET
                \nWhen errors are discounted after the final account have been prepared a statement of corrected profit and revised balance sheet must be prepared to show the adjusted profit.<\/p>\n

                \u00a0
                \n\u00a0
                \n\u00a0\"\"\/Format of statement of profit
                \n\"\"\/\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0N\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0N\u00a0\u00a0\u00a0\u00a0
                \nProfit per account \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0x
                \nAdd: Sales undercast \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0x
                \nReturns inwards overcast\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0x
                \nReturns outwards undercast\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0x
                \nPurchases overcast \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0x
                \nExpenses overcast\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0x
                \n\"\"\/Income undercast\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0x
                \n\"\"\/\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0xx
                \n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0xx
                \nLess: purchases undercast\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0x
                \nExpenses undercast \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0x
                \nIncome overcast\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0x
                \n\"\"\/\"\"\/Sales overcast\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0x\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0xx
                \nCorrected net profit\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0xx <\/p>\n

                \u00a0Illustration 3
                \nAn inexperienced book-keeper has produced the following balance sheet at 31st<\/sup> Dec., 2000 for a Retailer, Ojola Enterprises.
                \n\"\"\/\"\"\/DR\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0CR
                \n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Fixed assets \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0108,312
                \nCapital\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a075,336\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Current assets
                \n12% loan: Bola\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a030,000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Stock\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a028,239
                \nCreditors\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a039,423\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Debtors\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a039.924
                \nBank overdraft\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 12,951\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Drawings\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a012,390
                \n\"\"\/\"\"\/Profit and loss\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a027,600\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Suspense a\/c\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a01,050\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a085,998
                \n\"\"\/\"\"\/\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0194,310\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0194,310<\/p>\n

                \u00a0Mr. Olojo is surprised at the balance sheet and asks you to revise it.
                \nYour investigation show:<\/p>\n

                  \n
                1. The suspense account balance represents the difference in trial balance\n<\/li>\n<\/ol>\n
                    \n
                  1. Stock sheets were overcast by N3000\n<\/li>\n
                  2. Cash in hand should be N165\n<\/li>\n
                  3. The purchase day book totals for November of N12,360 was posted to purchase account as N12,630\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\n<\/li>\n
                  4. Fixture and fittings account balance of N6,900 has been omitted from the balance sheet\n<\/li>\n
                  5. An invoice for N750 had been included in stock and purchases but not posted to the personal account.\n<\/li>\n
                  6. Interest for half a year on the loan account had not been paid and no provision made for it.\n<\/li>\n
                  7. A sales return of N300 had been entered on the debit side of the account of Ade\n<\/li>\n<\/ol>\n

                    You are required to:<\/p>\n

                      \n
                    1. Write the suspense accounts\n<\/li>\n<\/ol>\n

                      ii. Drawing up a revised balance sheet as at 31st<\/sup> Dec., 2000<\/p>\n

                      \u00a0Solution
                      \n\"\"\/\"\"\/DR\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0CR
                      \nBal b\/f\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a04395\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Furniture and fittings\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a06900
                      \nPurchase (12,630-12,360)\u00a0\u00a0\u00a0\u00a0270
                      \nCash (1,050 \u2013 165)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0885
                      \nCreditor\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0750
                      \n\"\"\/\"\"\/Ade (300 x 2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0600
                      \n\"\"\/\"\"\/\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a06,900\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a06,900<\/p>\n

                      \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Statement of Profit
                      \nNet profit \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a027,600
                      \n\"\"\/Purchase overcast (12630 \u2013 12360)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0270
                      \n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a027,870
                      \nLess: Interest due\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a01,800
                      \n\"\"\/\"\"\/Stock overcast\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a03,000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a04,800
                      \n\"\"\/Corrected Net profit\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a023,070<\/p>\n

                      \u00a0Workings: Interest = 12% x 30,000 x \u00bd ( \u00bd yrs)
                      \n\u00a0\u00a0\u00a0\u00a0Interest paid = N1,800
                      \n\u00a0\u00a0\u00a0\u00a0Interest owing = N1,800( \u00bd yearly)<\/p>\n

                      \u00a0
                      \n\u00a0
                      \n\u00a0
                      \n\u00a0\"\"\/\"\"\/DR\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Balance sheet as at 31st<\/sup> Dec. 2000\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0CR
                      \n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Fixed asset (wk 1)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0115,212
                      \nCapital \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a075,336\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Current asset
                      \nNet profit\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a023,070\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Stock (wk2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a025,239
                      \n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a098,406\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Debtors\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a039,324
                      \n\"\"\/Less: Drawings\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a012,390\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Cash (wk4)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0165
                      \n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a086,016
                      \nCurrent liabilities
                      \nCreditor (wk3)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a040,173
                      \nBank overdraft\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a012,951
                      \nAccount interest \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a01,800
                      \n\"\"\/\"\"\/Loan \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a030,000
                      \n\"\"\/\"\"\/\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0179,940\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0179,940<\/p>\n

                      \u00a0Workings: <\/p>\n

                        \n
                      1. \n
                        Fixed asset\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0108,321\n<\/div>\n

                        Add furniture \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a06,900
                        \n\"\"\/\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0115,212<\/p>\n

                        \u00a0<\/li>\n

                      2. Stock:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0N28,239 \u2013 N3000 = 25,239\n<\/li>\n
                      3. Creditors: \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0N39, 423 + N750 = N40,173\n<\/li>\n
                      4. \n
                        Debtors:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0N39,924 \u2013 N600 = N39,324\n<\/div>\n

                        ASSIGNMENT
                        \nPAGE 159 question 4<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

                        FINANCIAL ACCOUNTING WEEKS TOPICS 1 REVISION 2 Accounting Errors Definition, types of errors (Book-keeping errors…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,240],"tags":[],"class_list":["post-2980","post","type-post","status-publish","format-standard","hentry","category-posts","category-first-term-ss2-financial-accounting"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2980","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/comments?post=2980"}],"version-history":[{"count":1,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2980\/revisions"}],"predecessor-version":[{"id":2981,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2980\/revisions\/2981"}],"wp:attachment":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/media?parent=2980"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/categories?post=2980"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/tags?post=2980"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}