AQA A-Level Accounting: Verification of accounting records (7127)

This study guide teaches section 3.4, Verification of accounting records, of the AQA A-level Accounting (7127) specification, version 1.1 (October 2026), for A-level exams from June 2019 onwards. The qualification is linear and untiered, and section 3.4 is examined on Paper 1, which assesses sections 1–8 and 14–18. It builds directly on the double entry model: every technique here checks records made with that model.

Course links: AQA A-level Accounting hub and the printable checklist. When you have worked through this guide, condense it with the revision notes and test yourself with the practice questions.

What this topic covers

Spec content (3.4)	What you must be able to do
Verification of the double entry records	Use a trial balance, bank reconciliation and sales and purchases ledger control accounts (with contras, interest, and balances on the “wrong” side)
How to correct errors in double entry records	Use the general journal and a suspense account
The effect of errors on profit and the statement of financial position	Calculate corrected profit and redraft financial statements
Benefits and limitations of verification techniques	Say which errors each technique reveals and which it does not

The six errors a trial balance does not reveal

Agreeing trial balance totals suggest the double entry arithmetic is right. They do not prove the records are right. Each error below keeps debits equal to credits.

Error	What happens	Example
Commission	Correct amount, correct type of account, wrong account	A receipt from J Patel credited to J Patil
Complete reversal	Correct accounts and amount, but debit and credit swapped	Cash paid to a supplier debited to bank, credited to the supplier
Compensating	Two or more errors of equal value cancel out	Wages overcast by £100 and revenue overcast by £100
Omission	The whole transaction is left out	An invoice never entered in the sales journal
Original entry	Wrong amount in the book of prime entry, so both sides use it	£1 380 invoice entered as £1 830
Principle	Entry in the wrong class of account	Van repairs debited to the motor vehicles (asset) account

The four errors a trial balance does reveal

Error	What happens	Clue
Addition	A total in a journal or account is cast wrongly	Often a round figure
Partial omission	Only one side of the double entry is recorded	Difference equals the amount omitted
Transposition	Digits reversed in one entry only (£1 250 posted as £1 520)	Difference divisible by 9
Unequal posting	Debit and credit entered at different amounts	Difference equals the gap between them

A transposition made in the book of prime entry, so that both sides use the wrong figure, is an error of original entry and is not revealed.

Correcting errors: the general journal and suspense account

When a trial balance does not agree, the difference is entered in a suspense account so that the statements can be drafted. Each error is then corrected through the general journal, with a narrative. Only errors that caused the imbalance pass through suspense. Errors that the trial balance does not reveal are corrected between the ledger accounts concerned.

Worked example 1: suspense account and corrected profit

Ferncliff Garden Supplies, a sole trader, extracted a trial balance at 31 March 2026. Debits totalled £186 420 and credits £185 790. The draft profit for the year was £42 300. The following errors were found.

1. The sales journal was undercast by £400.
2. Rent paid of £1 250 was correctly entered in the cash book but posted to the rent account as £1 520.
3. Discount allowed of £180 was entered in the customer’s account but not in the discount allowed account.
4. A cheque of £2 400 from P Okafor was credited to the account of P Okonkwo.
5. Repairs to a delivery van, £860, were debited to the motor vehicles account. Ignore depreciation.
6. Insurance of £795 was credited in the cash book but debited to the insurance account as £935.

Step 1: open the suspense account. Debits exceed credits by 186 420 − 185 790 = £630, so suspense needs a credit balance of £630.

Step 2: journal entries.

                                         Dr £      Cr £
1  Suspense                              400
     Revenue                                       400
   Sales journal undercast
2  Suspense                              270
     Rent                                          270
   Rent overstated, 1 520 - 1 250
3  Discount allowed                      180
     Suspense                                      180
   Discount allowed not posted
4  P Okonkwo                           2 400
     P Okafor                                    2 400
   Receipt credited to wrong customer
5  Van repairs                           860
     Motor vehicles                                860
   Revenue expenditure capitalised
6  Suspense                              140
     Insurance                                     140
   Insurance overstated, 935 - 795

Step 3: the suspense account clears.

                     Suspense account
Revenue        400 | Balance b/d          630
Rent           270 | Discount allowed     180
Insurance      140 |
              ----                       ----
               810                        810

Step 4: corrected profit.

Draft profit for the year                  42 300
Add: revenue undercast                        400
     rent overstated                          270
     insurance overstated                     140
Less: discount allowed omitted               (180)
      van repairs capitalised                (860)
Corrected profit for the year              42 070

Error 4 changes neither profit nor total receivables, but P Okafor’s account wrongly still shows £2 400 owing.

The effect of errors on financial statements

For every error, ask: does it change profit, and does it change an asset, liability or capital figure?

• An expense wrongly capitalised (error 5 above) overstates profit and non-current assets by the same amount.
• An omitted accrual overstates profit and understates current liabilities.
• Overvalued closing inventory overstates profit and current assets.

To redraft statements, correct profit first, then each affected line of the statement of financial position, then check that net assets equal the corrected capital. If they do not, an adjustment has been missed.

Control accounts

A sales ledger control account totals the receivables ledger; a purchases ledger control account totals the payables ledger. In 7127 they are memorandum records. The individual customer and supplier accounts carry the double entry. The control account is built separately from totals in the books of prime entry, and its closing balance is compared with the total of the list of individual balances.

Sales ledger control
Debit	Balance b/d (debit), credit sales, dishonoured cheques, interest charged on overdue accounts, refunds to customers, balance c/d (credit)
Credit	Balance b/d (credit), receipts, discount allowed, sales returns, irrecoverable debts, contra entries, balance c/d (debit)

Purchases ledger control
Debit	Balance b/d (debit), payments, discount received, purchases returns, contra entries, balance c/d (credit)
Credit	Balance b/d (credit), credit purchases, interest charged by suppliers, refunds from suppliers, balance c/d (debit)

Four items need care.

• Contra entries. When a business both buys from and sells to the same firm, the two balances can be set off. Debit the purchases ledger control account and credit the sales ledger control account.
• Interest charged on overdue accounts increases what a customer owes (debit sales ledger control). Interest charged by a supplier increases what you owe (credit purchases ledger control).
• Credit balances in the sales ledger arise when a customer overpays or returns goods already paid for. Debit balances in the purchases ledger arise when you overpay a supplier. Carry both down separately; never net them off.
• Cash sales, cash purchases and provisions for doubtful debts never appear. None of them changes the amount owed by or to an individual credit customer or supplier.

Worked example 2: control accounts for one month

Ashby Tiles provides the following for May 2026.

Item	£
Sales ledger balances 1 May: debit / credit	38 650 / 420
Credit sales	61 300
Cash sales	9 800
Receipts from credit customers	55 240
Discount allowed	1 160
Sales returns	2 330
Irrecoverable debts written off	940
Interest charged on overdue accounts	210
Cheque from customer dishonoured	1 450
Contra with purchases ledger	1 600
Refund paid to a customer with a credit balance	300
Increase in provision for doubtful debts	500
Sales ledger credit balances 31 May	380
Purchases ledger balances 1 May: credit / debit	24 980 / 260
Credit purchases	37 450
Payments to credit suppliers	33 120
Discount received	740
Purchases returns	1 190
Interest charged by a supplier	95
Purchases ledger debit balances 31 May	150

                 Sales ledger control account
Balance b/d          38 650 | Balance b/d             420
Credit sales         61 300 | Bank                 55 240
Interest charged        210 | Discount allowed      1 160
Bank (dishonoured)    1 450 | Sales returns         2 330
Bank (refund)           300 | Irrecoverable debts     940
Balance c/d             380 | Purchases ledger
                            |   control (contra)    1 600
                            | Balance c/d          40 600
                    -------                       -------
                    102 290                       102 290
Balance b/d          40 600 | Balance b/d             380

Cash sales (£9 800) and the provision (£500) are left out.

               Purchases ledger control account
Balance b/d             260 | Balance b/d          24 980
Bank                 33 120 | Credit purchases     37 450
Discount received       740 | Interest charged         95
Purchases returns     1 190 | Balance c/d             150
Sales ledger control
  (contra)            1 600 |
Balance c/d          25 765 |
                     ------                        ------
                     62 675                        62 675
Balance b/d             150 | Balance b/d          25 765

If the list of purchases ledger credit balances does not total £25 765, look for an error.

Bank reconciliation statements

A bank reconciliation explains why the cash book bank column and the bank statement differ. Work in two stages.

1. Update the cash book for items on the bank statement not yet recorded (standing orders, direct debits, credit transfers, bank charges, dishonoured cheques) and for errors in the cash book.
2. Reconcile the updated balance with the statement, using items in the cash book that the bank has not yet processed: unpresented cheques and outstanding lodgements.

Worked example 3: bank reconciliation

Kestrel Print’s cash book showed a debit (favourable) bank balance of £4 215 on 30 June 2026. The bank statement showed a favourable balance of £5 790, bank charges £65, a standing order for insurance £320, a credit transfer from a customer £1 180 and a dishonoured customer cheque £540, none in the cash book. A cheque for £1 670 paid to a supplier had been entered in the cash book as £1 760. Unpresented cheques were £2 340 and £815; an outstanding lodgement was £1 925.

            Cash book (bank columns)
Balance b/d        4 215 | Bank charges             65
Credit transfer    1 180 | Insurance (S/O)         320
Supplier (error)      90 | Dishonoured cheque      540
                         | Balance c/d           4 560
                  -----                         -----
                  5 485                         5 485

Kestrel Print
Bank reconciliation statement at 30 June 2026
                                          £
Balance per bank statement            5 790
Add: outstanding lodgement            1 925
                                      7 715
Less: unpresented cheques (2 340 + 815)  (3 155)
Balance per cash book                 4 560

The statement of financial position shows the updated cash book figure, £4 560.

Benefits and limitations of verification techniques

Technique	Benefits	Limitations
Trial balance	Checks the arithmetic of the double entry; reveals addition, partial omission, transposition and unequal posting errors; a starting point for financial statements	Does not reveal commission, complete reversal, compensating, omission, original entry or principle errors
Control accounts	Locate an error to one ledger; give quick totals of receivables and payables; deter fraud when someone other than the ledger clerk prepares them	A wrong figure in the book of prime entry (original entry), a missing invoice (omission) or a posting to the wrong customer (commission) still agrees
Bank reconciliation	Finds items the bank has recorded that the business has not, errors in the cash book and errors by the bank	Checks only the bank column; a payment posted to the wrong expense account, or a cheque written for the wrong amount and recorded as written, is not revealed

Addition, partial omission, transposition and unequal posting errors in the personal ledgers make a control account disagree with its list of balances.

Common errors

• Putting a suspense entry against an error of commission or principle. Those errors never caused the imbalance.
• Including cash sales or a change in the provision for doubtful debts in the sales ledger control account.
• Netting credit balances in the sales ledger against debit balances.
• Treating a transposition in the book of prime entry as revealed by the trial balance.
• Starting the reconciliation without updating the cash book, then using the bank statement balance in the statement of financial position.
• Changing profit for an error that only moves an amount between two asset accounts.

For Paper 1 timing see exam preparation; find weak spots with the free diagnostics.

Official syllabus

AQA A-level Accounting (7127) specification, version 1.1, October 2026, A-level exams June 2019 onwards (AQA), section 3.4 Verification of accounting records.