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Tedius


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ICB Level III question.
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I've just completed a mock level III computerised exam that I got from the ICB shop.  Anyway after I'd completed it, I noticed a difference in my balances and those provided in the supplied answers.  Normally I would accept that it was me that got it wrong, but this time I'm sure that I've got it right, and I just want someone elses oppinion.

The basic concept is that I'm the bookkeeper for a legal firm, and in task 3 I have to make entries for the accruals.  The accruals mentioned are "Accountancy Fees £2,000" and "Electricity £400".  Now I enter these using jurnal entries

Accountancy Fees Dr 2,000
Electricity             Dr    400
Accruals               Cr 2,400

At the end I print out the Trial Balance where I see the balances

Accountancy Fees Dr 2,000
Electricity              Dr 8,400

NOTE: Electricity had an opening balance of £8,000

Now comed the intresting bit.  In the answer sheet supplied with the mock I see different value for these two accoutns, namely

Accountancy Fees Dr 2,400
Electricity              Dr 8,000

Would people agree that this looks like an error in the answer sheet or am I missing something.



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Wella


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At first glance it would appear that the suggested answer contains errors (one error of principle, and one error of omission just to keep the learning curve going), and the accrued charges have been posted to the wrong accounts, or not posted at all.

However, just a thought, are there opening balances already in the accruals a/c (there could also be entries in the prepayment a/c) , b/f from the previous year that need to be reverse journalled to correct the balances.

HTH
Bill

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Stardoe


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Hi Tedius,

I agreed with Bill. They are very fond of the accruals/prepayments brought forward from the previous year that need to be reversed before dealing with the current year's accruals/prepayments. For instance ...the Electricity opening bal of £8000 might have included an accrual of £400 for the previous year which now needs to be reversed , making a balance of £7,600 - then the accrual for this year of £400 is added, making a total of £8,000.

Of course, there could well be an error...it has been known....! But it is worth checking smile.gif

Pauline

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Pauline
Tedius


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Thanks Bill and Pauline,

I've just double checked the question and there is no b/f balance for the accruals or prepaid accounts and no mention to that effect either.  I should have mentioned in my original post that the "Accruals" account has a balance of CR £2,400 when I print out the trial balance.

So it does look like there is an error in the answer.

Bill, the error of principle is that the £400 accrual has been charged to the "Accountancy Fees" account instead of the "Electricity" account, but what is the error of omission?


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Wella


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Tedius wrote:

Bill, the error of principle is that the £400 accrual has been charged to the "Accountancy Fees" account instead of the "Electricity" account, but what is the error of omission?
Hi Tedious

Sorry, quite right, there is no ommission. Just testing smile.

Bill

 



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