Error - ' recording a prompt payment discount allowed correctly in general ledger but not recording it in the subsidiary ledger'
Can this error be disclosed by TB or not ?
if it can be disclosed-why ?
if it can not be disclosed-why?
My thinking is that totals from general ledger should equal totals from subsidiary ledger. They are not equal here . Do we ignore subsidiary ledger when we prepair TB ?
My immediate reaction to that error description is to assume that the 'general ledger' means the nominal ledger and the 'subsidiary ledger' means either the individual sales or purchase ledger accounts (depending on whether it's a sales discount given or purchase discount received).
If so, my reading suggests it's a case of one side of the transaction being recorded in the nominal ledger account for discounts given (or received), and the other side not being recorded in the relevant sales (or purchase) ledger account it relates to. (Double entry, remember!)
That would mean the trial balance would reveal that there's an error (but not what it is) because the debit totals wouldn't agree with the credit totals.
However, it may depend on what is meant by subsidiary ledgers - I've never studied, so I don't know what terminology is used in that context. :)
__________________
Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
Error - ' recording a prompt payment discount allowed correctly in general ledger but not recording it in the subsidiary ledger'
Can this error be disclosed by TB or not ?
if it can be disclosed-why ?
if it can not be disclosed-why?
My thinking is that totals from general ledger should equal totals from subsidiary ledger. They are not equal here . Do we ignore subsidiary ledger when we prepair TB ?
thanks Vince for reply. When they say that this transaction has been correctly recorded in general ledger I immediately assume that both debit and credit sides in general ledger have been recorded correctly. Is this assumption correct ?
Dr Discount allowed
Dr Vat
Cr Receivables ( Sales ledger control account )
Is this how this transaction should have been recorded ? If yes, where did they make en error ?
-- Edited by rafapak on Monday 21st of November 2016 08:51:23 PM
That's the point of my final sentence - my reading is that only one side has been correctly recorded, but it's possible they mean something different, along the lines of your interpretation.
i.e. I'm assuming that the credit in your example has been missed off.
__________________
Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
