*NAPTEB GCE (FINANCIAL ACCOUNTING) O’LEVEL VERIFIED ANSWERS*
(1a) Book of prime entry is a book or record in which certain types of transaction are recorded before becoming part of the double-entry book-keeping system. The most common books of prime entry are the day book, the cash book, and the journal.
*(Choose Any Four)*
(i) Sales day book
(ii) Purchase day book
(iii) Sales returns day book
(iv) Purchases returns day book
*(choose Any Four)*
(i) It is used to answer questions on double entry principles
(ii) It is used in correction of errors
(iii) It is used in opening and closing entries
(iv) It is used in purchase of fixed assets on credit
(v) It is used in sales of fixed assets on credit
(vi) It is used in writing off bad debt
Principle: An error of principle is an accounting mistake in which an entry violates a fundamental principle of accounting or a fundamental accounting principle established by a company.
Example : Motor Van bought entered in motor expense account
(2b)Compensation:compensating error is an accounting error that offsets another accounting error. These errors can be difficult to spot when they occur within the same account and in the same reporting period, since the net effect is zero.
Example, the wages expense could be too high by $2,000 due to one error, while the cost of goods sold could be too low by $2,000 due to a compensating error.
(2c)commission : Error of commission is an error that occurs when a bookkeeper or accountant records a debit or credit to the correct account but to the wrong subsidiary account or ledger.
For example, money that has been received from a customer is credited properly to the accounts receivable account, but to the wrong customer.
(2d)Complete reversal of entries: This errors occur when the correct amount is posted to the correct accounts but the debits and credits have been reversed. This is when an item is posted to the wrong side of the account
For example ; receipt of cheque 31,000 from Okoye’s was debited to Okoye’s account and credited to bank account
(2e)Omission: Error of omission occurs when transactions are completely omitted from the debit and credit side of the book. This error is corrected by entering the omitted amount in the journal and posting in the ordinary way
For example, A copywriter buys a new business laptop but forgets to enter the purchase in the books….
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