Business > QUESTIONS & ANSWERS > Toturial 2 questions with solutions.pdf (All)

Toturial 2 questions with solutions.pdf

Document Content and Description Below

BUSN1001 BUSINESS REPORTING AND ANALYSIS Tutorial 2 questions Chapter 4: Business transactions 4.10 Both the journal and the ledger can be used to record a large number of transactions. Differenti... ate between financial record-keeping in the journal and the ledger. A journal is a book which records each business transaction shown on the source documents in chronological order. An entity may record their transactions in separate journals for transactions that occur frequently. For example: entities which deal mainly in cash will have a cash receipts journal and cash payments journal. An entity dealing with credit will also have a credit sales and credit purchases journal. A ledger is an account that accumulates all the information about one item in the accounting reports, e.g. sales, cash. It is often prepared using the summarised information from the journals. For example: if you used special journals to record similar transactions such as cash receipts or cash payments then you would post the totals from these journals to the ledger accounts. There will be a separate ledger account for each item affected by the transaction and each account will have a debit side and a credit side. The advantage of recording in the ledger is that it summarises all the transactions affecting one account e.g. Wages. 4.15 You are the bookkeeper for Haute Fashions and on review of the business's records and reports you realise that the trial balance does not balance. Your supervisor has asked you to investigate why this might have occurred. Explain with examples what type of errors would have caused the trial balance not to balance. The three common errors are; single entry errors, transposition errors and incorrect entries. Example of single entry error: A single entry error occurs when only one aspect of the transaction has been recorded, e.g. provided sales on credit and the entity records only the increase to the Sales revenue accounts and fails to record the increase to the Accounts receivable account. Example of a transposition error: Recording the purchase of office supplies for cash $490 where the decrease in cash is recorded as $409 but the income in office supplies is recorded as $490. This is a transposition error as the difference between the correct amount and the recorded amount is $81 and this amount is divisible by 9 [Show More]

Last updated: 2 years ago

Preview 1 out of 6 pages

Buy Now

Instant download

We Accept: