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Chapter
Correction of accounting errors
Chapter nine: Correction of accounting errors
Nine

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Introduction
Correcting accounting errors is a fundamental aspect of maintaining accuracy and
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transparency in a business’s financial statements. In this chapter, you will learn relevant
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computations to correct various accounting errors by using suspense account. Also
you will learn various accounting errors on the reported profit/loss and the financial
position of a business. The competencies developed will enable you to adjust records
in financial statements.

Financial statements with expected of accounting personnel, the
errors occurrence of errors is a possibility.
Errors can occur at various stages of the
The concept of accounting accounting process. They may happen during
errors the initial recording of a transaction, while
Accounting errors are inaccuracies or posting from journals to ledger accounts, or
mistakes that occur during the recording during the addition or subtraction of figures.
of financial transactions in a business’s These errors can affect the arithmetical
accounting books. These errors can arise accuracy of the accounts or contravene
from various sources, including oversight, the basic principles of bookkeeping. When
misunderstanding of accounting principles, an error occurs, it is crucial to rectify it
clerical errors, and even fraud. An error by making the necessary corrections in
is an unintentional mistake that occurs the books of accounts. This ensures the
accidentally, with no intent to deceive. accuracy and reliability of the financial
However, if such a mistake is made statements, providing a true and fair view
intentionally, it crosses into the realm of a of the business financial performance and
fraud. Despite the diligence and accuracy position.

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