ACCA Applied Knowledge · Financial Accounting · Correction of errors
A credit sale of $4,500 to customer Hale was correctly recorded in the sales account but was debited to the account of customer Hall by mistake. Which statement is correct?
The trial balance still balances and the error is one of commission. The debit went to the wrong customer account, Hall instead of Hale, but both are receivables and the amount and sides were right, so total debits still equal total credits.
- AThe trial balance will not balance, because the debit and credit totals differ by $4,500
- BThe trial balance will still balance, and the error is one of commissionCorrect
- CThe trial balance will still balance, and the error is one of original entry
- DThe trial balance will still balance, and the error is a compensating error
Explanation
The correct amount was posted on the correct side but to the wrong receivable account, which is the same class of account. This is an error of commission, and total debits still equal total credits. Original entry would require a wrong amount in both entries.
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