I've just completed a mock level III computerised exam that I got from the ICB shop. Anyway after I'd completed it, I noticed a difference in my balances and those provided in the supplied answers. Normally I would accept that it was me that got it wrong, but this time I'm sure that I've got it right, and I just want someone elses oppinion.
The basic concept is that I'm the bookkeeper for a legal firm, and in task 3 I have to make entries for the accruals. The accruals mentioned are "Accountancy Fees £2,000" and "Electricity £400". Now I enter these using jurnal entries
Accountancy Fees Dr 2,000 Electricity Dr 400 Accruals Cr 2,400
At the end I print out the Trial Balance where I see the balances
Accountancy Fees Dr 2,000 Electricity Dr 8,400
NOTE: Electricity had an opening balance of £8,000
Now comed the intresting bit. In the answer sheet supplied with the mock I see different value for these two accoutns, namely
Accountancy Fees Dr 2,400 Electricity Dr 8,000
Would people agree that this looks like an error in the answer sheet or am I missing something.
__________________
You've got a lot of choices in your life. If getting out of bed in the morning is a chore and you're not smiling on a regular basis, try another choice.
At first glance it would appear that the suggested answer contains errors (one error of principle, and one error of omission just to keep the learning curve going), and the accrued charges have been posted to the wrong accounts, or not posted at all.
However, just a thought, are there opening balances already in the accruals a/c (there could also be entries in the prepayment a/c) , b/f from the previous year that need to be reverse journalled to correct the balances.
I agreed with Bill. They are very fond of the accruals/prepayments brought forward from the previous year that need to be reversed before dealing with the current year's accruals/prepayments. For instance ...the Electricity opening bal of £8000 might have included an accrual of £400 for the previous year which now needs to be reversed , making a balance of £7,600 - then the accrual for this year of £400 is added, making a total of £8,000.
Of course, there could well be an error...it has been known....! But it is worth checking
I've just double checked the question and there is no b/f balance for the accruals or prepaid accounts and no mention to that effect either. I should have mentioned in my original post that the "Accruals" account has a balance of CR £2,400 when I print out the trial balance.
So it does look like there is an error in the answer.
Bill, the error of principle is that the £400 accrual has been charged to the "Accountancy Fees" account instead of the "Electricity" account, but what is the error of omission?
__________________
You've got a lot of choices in your life. If getting out of bed in the morning is a chore and you're not smiling on a regular basis, try another choice.
Bill, the error of principle is that the £400 accrual has been charged to the "Accountancy Fees" account instead of the "Electricity" account, but what is the error of omission?
Hi Tedious
Sorry, quite right, there is no ommission. Just testing .
