correct errors by means of journal entries

📚 3.2 Correction of Errors – Cambridge IGCSE Accounting 0452

What is an error?

An error is a mistake that has been recorded in the books but is not a normal business transaction. It could be a wrong amount, wrong account, or a transaction that was omitted entirely.

Common Types of Errors

• Wrong amount (e.g., £500 recorded as £50)
• Wrong account (e.g., Cash instead of Accounts Receivable)
• Omitted transaction (e.g., a sale that never entered the books)
• Duplicate entry (the same transaction recorded twice)

How to Correct an Error

1. Identify the error and the accounts affected.
2. Determine the correct amount and the correct account.
3. Prepare a correcting journal entry that reverses the mistake.
4. Post the correcting entry to the ledger.
5. Check that the trial balance balances again.

Analogy: Fixing a Broken Pencil

Think of your ledger as a pencil. If you accidentally write the wrong number, you can erase it and write the correct one. In accounting, you erase the mistake by making a journal entry that cancels it out and then write the correct information.

Example 1 – Wrong Amount

Suppose you recorded a sale of £1,200 as £120.

Correct entry:

Example 2 – Wrong Account

Suppose you recorded a purchase of office supplies for £300 but used the Cash account instead of Office Supplies.

Correct entry:

Exam Tip Box

Quick Practice Question

On 10/05 you recorded a payment of £450 to a supplier but used the Accounts Payable account instead of the Bank account. Write the correcting journal entry.

• Original entry: Accounts Payable £450 / Bank £450
• Correcting entry: Bank £450 / Accounts Payable £450