O-LevelAccountingVerification of accounting records7707/22 · Oct/Nov 2023 · Q420 Marks

Rachel is a trader. The totals of Rachel's trial balance prepared on 30 September 2023 did not agree and the difference was placed in a suspense account. Rachel later discovered the errors shown in the following table. REQUIRED

(a)Complete the following table to show the entries required to correct each error. The first one has been completed as an example. Entries required to correct the error Error | Debit Account | Debit $ | Credit Account | Credit $ A payment for rent, $350, had been debited to the wages account. | Rent payable | 350 | Wages | 350[9]
(b)Prepare the suspense account. Include the balancing figure as the original difference on the trial balance.[5]
(c)Rachel's draft profit before the errors were discovered was $18243. REQUIRED Calculate Rachel's profit for the year ended 30 September 2023 after the errors in the table have been corrected.[5]
(d)State why financial statements may still be reliable even if errors are present.[1]

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2023). The mark or mark type is shown in brackets.

[1] (a) Sales 90 (Debit)
[1] (a) Suspense 90 (Credit)
[1] (a) Sales returns 110 (Debit)
[1] (a) Purchases returns 110 (Debit)
[1] (a) Suspense 220 (Credit)
[1] (a) Suspense 63 (Debit)
[1] (a) Office expenses 63 (Credit)
[1] (a) Cole 29 (Debit)
[1] (a) Motor expenses 29 (Credit)
[1] (b) Sales (Credit entry) 90
[1] (b) Purchases returns (Credit entry) 110
[1] (b) Sales returns (Credit entry) 110
[1] (b) Difference on trial balance (Debit entry) 247 OF
[1] (b) Office expenses (Debit entry) 63
[1] (c) Draft profit 18243
[1] (c) Add: Office expenses 63
[1] (c) Add: Motor expenses 29
[1] (c) Less: Sales 90
[1] (c) Less: Purchases returns 110
[1] (c) Less: Sales returns 110
[1] (c) Corrected profit 18025 OF
[1] (d) Financial statements can still be reliable if errors are present provided those errors are not material or significant

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