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Suspense Theory - Coggle Diagram
Suspense Theory
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Errors of Omission
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Because they are never entered nothing is posted to the ledger accounts an d it is not included in the trial balance
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Errors of original entry
These are errors made in the books of first entry which are then, subsequently, posted to the appropriate ledger accounts.
For example: credit purchases form T. Long €223 entered as €322 in the purchases book and posted accordingly to both the purchases a/c and to Long's a/c.
Compensating Errors
This is where an error on the debit side of one account is compensated by another error of an equal amount on the credit side of another account.
For example: a cash payment of €550 for repairs entered as €55 on the debit side of the repairs a/c and on th ecredit side of the cash a/c.
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Reversal of Entries
This is where the correct accounts are used but both entries are on the incorrect sides of accounts.
For example: rent prepaid €300 should be credited to the bank a/c and debited to the rent a/c, but these were entered incorrectly as a credit in the rent a/c and a debit in the bank a/c.
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