Accounting SA Q & A

Error of commission

Making a debit or credit entry for the correct amount in the correct class of account, but in the wrong account.

Error of principle

Making a debit or credit entry for the correct amount, but in the wrong class of account.

Sales ledger

Ledger where the accounts of credit customers are maintained.

Purchase ledger

Ledger where the accounts of credit suppliers are maintained.

General/Nominal ledger

Ledger where all other accounts are maintained.

Dishonoured cheque

A cheque received that the debtor's bank refuses to pay.

Credit balance in cash column

Not possible because it is impossible to take out more cash than is physically present in the cash box.

Contra entry

An entry that appears on both sides of the cash book.

Error of omission

When a transaction is completely omitted from the records.

Error of original entry

When a mistake is made transferring the amount from the source document to the subsidiary book.

Reasons for maintaining accounting records

To inform the owner about the business's profitability and resource utilization.

Reasons for preparing a trial balance

To check the arithmetical accuracy of double-entry bookkeeping and locate arithmetical errors. It is also useful when preparing financial statements.

Bank overdraft

When more money has been paid out of the bank than was put into the bank account.

Cash discount

An allowance given to the customer when an account is settled within a time limit set by the supplier.