Error of Complete Reversal (Cambridge International IGCSE Accounting)

Error of complete reversal

What is an error of complete reversal?

• An error of complete reversal occurs when a transaction is entered into the wrong sides of both of the correct ledger accounts

  • The account that was debited should have been credited
  • The account that was credited should have been debited

• The correct amount is included in the total for the debits and the total for the credits

  • The totals will therefore balance

How do I correct an error of complete reversal?

• Double the value of the transaction

  • This is because you need to apply the transaction twice

    • Once to undo the error
    • Once to make the correct entries

• Make the entries on the correct side

  • This will be the opposite side to where it was entered

Worked Example On 1 March 2024, Ashika identified an error where goods sold to Kiha, for $200, were debited to the sales account and credited to Kiha’s account.

Prepare journal entries to correct the error. A narrative is required.

Answer:

The accounts currently look like:

• Debit sales $200
• Credit Kiha $200

The accounts should look like:

• Debit Kiha $200
• Credit sales $200

Fix the errors

• An amount of $400 on the correct side of both accounts is needed to fix the error

Final answer: Journal

Final answer: Date	Final answer: Details	Final answer: Debit Final answer: $**	Final answer: Credit Final answer: **$
Final answer: 2024 Final answer: Mar 1	Final answer: Kiha	Final answer: 400
	Sales		Final answer: 400
	Final answer: Correction of error of complete reversal - credit sale of $200 entered on the wrong side of the accounts