Accounting for IGCSE & O level - Accounting Procedures (Section 19 - No. 12)
Which of the following is an example of a compensating error?
A sales invoice for $500 is recorded as $50.
A purchase of goods is debited to the wrong account.
A debit of $100 is posted as a credit of $100 in a different account.
A cash payment is not recorded in the cash book.
Explanation
A compensating error is where an error offsets another error in the accounts.
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