OxfordAQA IGCSE Accounting: Verification of Accounting Records — Revision Notes

Condensed for the final weeks. For the full explanation, use the Verification of Accounting Records study guide.

The two error lists — learn them as a pair

This topic’s most heavily tested single fact is which errors a trial balance can and cannot catch. Learn both lists together, since exam questions often ask you to identify which list an error belongs to:

Trial balance does not reveal	Trial balance does reveal
Commission (posted to correct type of account, wrong person)	Addition (a casting error in a ledger account)
Complete reversal (correct amount, wrong side of both accounts)	Partial omission (one entry made, its double entry missed)
Compensating (two unrelated errors of equal value canceling out)	Transposition (digits swapped, e.g. 540 posted as 450)
Omission (transaction left out of the books entirely)	Unequal posting (unequal debit and credit amounts posted)
Original entry (wrong amount, correct on both sides)
Principle (posted to the wrong class of account)

The one-line test: if debits and credits are still numerically equal despite the error, the trial balance cannot catch it.

Control accounts as a checking tool, not a replacement

A control account is a memorandum total, not a substitute for the individual customer or supplier ledger accounts it summarises. Its job is to catch a discrepancy between the total and the sum of individual balances. Remember the two exceptions candidates most often forget:

• A debit balance in the payables ledger can occur (a supplier has been overpaid, or goods returned after payment).
• A credit balance in the receivables ledger can occur (a customer has overpaid, or a refund is due).

Both should be shown, not silently excluded, when a control account or list of balances is prepared.

Bank reconciliation — two directions, not one

Keep the two halves of reconciliation strictly separate:

1. Update the cash book first for items the bank already knows about that the business has not yet recorded: bank charges, credit transfers, direct debits, standing orders, dishonoured cheques.
2. Then reconcile the updated cash book balance to the bank statement for items the business has recorded that the bank has not yet processed: unpresented cheques (subtract from bank statement balance) and outstanding lodgements (add to bank statement balance).

Common confusion to avoid: an unpresented cheque reduces the bank’s recorded balance relative to the cash book, not the other way round — get the direction wrong and every reconciliation total that follows is wrong too.

Correcting errors: suspense account vs journal only

Use this rule to decide which tool an error needs:

• If the trial balance does not balance, open a suspense account for the difference, then correct it via journal entries as each error is found.
• If the trial balance already balances (a compensating, omission, commission, principle, original entry or complete reversal error), no suspense account is needed — correct directly via the general journal.

Effect on profit

Every error-correction question expects you to state the knock-on effect on reported profit, not just the correcting entry. Ask: does the correction increase, decrease, or leave unchanged the recorded revenue or expense? An error affecting only balance-sheet accounts (e.g. two asset accounts) leaves profit unchanged; an error touching a revenue or expense account changes it.

Sequencing a full error-correction question

Exam questions on this topic often chain several steps together. Work them in this fixed order, every time:

1. Identify which of the ten named error types applies.
2. Decide whether a suspense account is needed (only if the trial balance itself is out of balance).
3. Write the journal entry that corrects the ledger accounts.
4. State the effect on the suspense account balance, if one was opened.
5. State the effect on reported profit, if the error touches a revenue or expense account.

Skipping straight to step 3 without first classifying the error (step

1. is the most common reason marks are lost even when the final journal entry is arithmetically correct — mark schemes credit the reasoning, not only the final figures.

Exam traps

• Assuming a balanced trial balance proves the records are error-free.
• Opening a suspense account for an error that never caused an imbalance in the first place.
• Reconciling an unpresented cheque or outstanding lodgement on the wrong side.
• Correcting an error’s ledger entry but omitting its effect on profit.
• Forgetting that a control account is memorandum only, not a replacement ledger.

Self-test

1. Name the six errors a trial balance cannot reveal.
2. Name the four errors a trial balance can reveal.
3. In what order should a bank reconciliation be worked, and why?
4. When is a suspense account required, and when is it not?
5. Give one example of an error that changes reported profit and one that does not.

Answers: 1. Commission, complete reversal, compensating, omission, original entry, principle. 2. Addition, partial omission, transposition, unequal posting. 3. Update the cash book first for items the bank already knows about, then reconcile the updated balance against the bank statement for items the business has recorded that the bank has not yet processed — working in the wrong order produces an incorrect reconciled balance. 4. Required only when the trial balance itself is out of balance; not required when the trial balance already balances despite an error being present (commission, complete reversal, compensating, omission, original entry or principle). 5. An error in a revenue or expense account (e.g. sales understated) changes profit; an error confined to two balance-sheet accounts (e.g. one asset misclassified as another) leaves profit unchanged.