May 2019 Q2 c.
The trial balance is an internal control check to confirm the arithmetic accuracy of the gen-eral ledger. Control accounts are impersonal accounts and part of the double-entry system. If the control accounts do not balance, then it is obvious that a mistake has taken place in the respective ledger.
Required:
i) With suitable explanations each, explain TWO (2) errors that can be detected by the trial balance. (3 marks)
View Solution
- Transposition: A transposition error is a simple error of data entry that occurs when two digits that are either individual or part of a larger sequence of numbers are accidentally reversed when posting a transaction. If one is reversed and the other is correct.
- Omission (if it’s one sided)
- Commission ( If one sided, or two debit entries are made)
ii) State THREE (3) reasons for having control accounts. (3 marks)
View Solution
- They provided a check on the accuracy of entries made in the personal accounts in the receivables and payables ledger.
- Control accounts also assist in the location of errors.
- Where there is a separation of clerical duties, the control account provides an internal check.