Essay
business unit 10 assignment 2
- Institution
- PEARSON (PEARSON)
recording financial transactions, P4,P5,P6,M3,M4,D2,D3
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Unit 10 assignment 2In this assignment I am going to be preparing control accounts, explaining errors in accounting
records, recording journal entries, analysing control and personal accounts, correcting errors in
journals and suspense counts, then evaluating the importance of control mechanisms and
evaluating the impact of errors in accounting.
P4
For the debtors control account
£
Sales ledger debit balance 5,030
Sales ledger credit balance 620
Credit sales for the month 54,010
Cash and cheques received 47,100
Bad debts written off 2,570
Discounts allowed 490
Returns inwards 1,240
Dishonoured cheques 980
Interest due on overdue accounts 180
For the creditors control account
£
Creditor’s ledger control account credit balance b/d 25,400
Creditor’s ledger control account debit balance b/d 1,450
Returns outwards 1,200
Purchases for the quarter 123,900
Payments to creditors 100,300
Refund by cheque from creditor due to damaged items 1,180
Discount received 2,500
Cheque returned by creditor- presented too late to bank 3,300
Set off of credit amount between debtor’s ledger and creditors 620
ledger
Received from creditor due to overpayment 284
,Debtors control account
Debit Credit
Name £ Name £
Sales ledger debit balance 5,030 Sales ledger credit balance 620
Credit sales 54,010 Cash and cheques received 47,100
Dishonoured cheques 980 Bad debt written off 2,570
Interest on overdue account 180 Discount allowed 490
Returns inward 1,240
52,020
Balance c/d 8180
Total 60,200 Total 60,200
Balance b/d 8180
Creditors control account
Debit Credit
Name £ Name £
Balance b/d 1,450 Balance b/d 25,400
Return outwards 1,200 Purchase for quarter 123,900
Payment to creditor 100,300 Refund by cheque 1,180
Discount allowed 2,500 Cheque returned 3,300
Set off 620 Refund 284
106,070
Balance b/d 47,994
Total 154,064 Total 154,064
Balance c/d 47,994
P5
Types of errors that occur in accounting
, Accountants can make errors while recording financial information, this can be caused from
multiple different things such as entering incorrect digits, putting things in the wrong place,
forgetting to record an item, and recording the same item more than once.
Data entry errors are very common for accountants due to distractions or simple mistakes from
looking at all the numbers. This is done when information is entered wrong into the account
books, this will cause issues when the accounts total is incorrect the accountant will then have
to go fix the errors.
Error of omission is when something has been missed out and not recorded, this often happens
if a receipt is misplaced or if the accountant is distracted while recording information.
Error of commission is when an item has been put in the wrong place, this is usually when the
information is correct however it’s put into the incorrect sub account.
Error of transposition is win the incorrect amount it’s recorded, this usually happens when
numbers are reversed, such as £512 written as £215 this would then cause the accounts to be
incorrect.
Error of duplication is when the same item has been written in the books more than once, this
may be caused by the accountant getting distracted and losing track of where they were up to.
Errors that occur in accounting can affect businesses in many ways such as an incorrect
expense report, this will affect the profit margins and the income report. The cash flow
information would be incorrect, this would result in them not knowing how much money they
have and could lead to overspending. Another way it can affect a business is that it could result
in fraud being detected and an investigation may be needed.
However there are ways to prevent accounting errors; ensuring employees are trained on data
entry accuracy, and not giving too much work for the employees as this would cause more
mistakes. Another way to prevent errors is to use new accounting software, this will be easier to
notice any errors as it would flag up on the system.
P6
Journal Transactions
1st January David started his business with cash of £1,000,000
3rd January Paid into bank £70,000
5th January Bought goods for £5,000 (receipt number GD0097
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