Lesson Note on Correction of Errors: Suspense Account and Non-Affecting Errors for SS1

Class: Senior Secondary School 1 (SS1 / SSS 1)
Term: 3rd Term
Week: 5
Age: 15 years
Duration: 45 minutes
Subject: Book Keeping
Curriculum Theme: Trade
Previous Lesson: Corrections of Errors: Meaning of Errors, Types and Errors Affecting Trial Balance.
Topic: Correction of errors
Subject Matter: Errors not affecting trial balance, Correction of errors, Preparation of suspense account

Specific Objectives

By the end of the lesson, pupils should be able to:

Cognitive Domain:

• Define what constitutes an error in book-keeping.
• Identify and explain various types of errors that do not affect the trial balance.
• Explain the purpose of a suspense account.
• State how a suspense account is cleared.

Affective Domain:

• Appreciate the importance of accuracy in book-keeping records.
• Develop a careful approach to identifying and correcting accounting errors.

Psychomotor Domain:

• Correct errors not affecting the trial balance by making appropriate journal entries.
• Prepare a simple suspense account to clear differences in a trial balance.

Social Domain:

• Participate in discussions about common book-keeping errors.

Reference Materials

The following resources were used in planning this lesson:

• 9 Years Basic Education Curriculum (Book Keeping)
• State Unified Scheme of Work (Book Keeping)
• Longe, A. O. (Year). Simplified and Comprehensive Book-keeping and Accounting. (Specific edition and publisher to be filled in by teacher).

Instructional Materials

The teacher will teach this lesson with the aid of:

• Whiteboard and markers/chalk
• Textbooks on Book Keeping
• Charts showing examples of trial balance and suspense account
• Pupils’ exercise books

Rationale for the Lesson

This lesson helps pupils understand how to identify and correct mistakes in accounting records. Knowing how to correct errors is important for ensuring that financial statements are accurate and reliable, which helps individuals and businesses make good financial decisions.

Prerequisite/Previous Knowledge

Pupils should have a basic understanding of ledger accounts, journal entries, and the preparation of a trial balance.

Lesson Content/Board Summary

Correction of Errors

Errors Not Affecting Trial Balance

These are errors that, even when made, do not prevent the trial balance from agreeing. This means the total debits and total credits in the trial balance will still be equal.

The following are types of errors not affecting the trial balance:

• Error of Omission: This occurs when a transaction is completely left out of the books of accounts. For example, if a credit sale is neither debited to the customer’s account nor credited to the sales account.
• Error of Commission: This occurs when a transaction is recorded in the wrong account of the same class or in the correct account but with the wrong amount. For example, debiting Obi’s account instead of Ojo’s account (both being debtors).
• Error of Principle: This occurs when a transaction is recorded in the wrong class of account, violating accounting principles. For example, treating the purchase of a fixed asset (e.g., furniture) as an expense (e.g., stationery).
• Compensating Error: This occurs when two or more errors cancel each other out. For example, if the sales account is overstated by N5,000 and the purchases account is also overstated by N5,000, the effect on the trial balance balance is neutralised.
• Error of Original Entry: This occurs when an incorrect amount is entered in the book of original entry (e.g., journal), and this incorrect amount is then posted correctly to the ledger accounts. For example, a N10,000 transaction recorded as N1,000 in the cash book and posted as N1,000 to both ledger accounts.
• Complete Reversal of Entries: This occurs when the correct accounts are used but the debit entry is made on the credit side and the credit entry is made on the debit side. For example, cash received from a debtor is debited to sales account and credited to cash account.

Correction of Errors

Errors are corrected by making a new journal entry that reverses the effect of the original incorrect entry and then making another entry for the correct transaction. A narration should always be provided to explain the correction.

For example, if repairs to machinery (an expense) were wrongly debited to the Machinery Account (an asset), the correction would involve:

• Crediting the Machinery Account to reduce the asset.
• Debiting the Repairs Account to record the expense correctly.

Suspense Account

A suspense account is a temporary account opened to balance the trial balance when it does not agree. This disagreement usually happens due to single-sided errors or errors affecting only one account.

The following are reasons why a suspense account may be opened:

• A single entry made for a transaction (e.g., only debiting an account without a corresponding credit).
• An incorrect amount posted to one side of an account.
• An omission of one ledger account balance in the trial balance.
• An error in totalling the debit or credit columns of the trial balance.

The suspense account is cleared once all errors causing the trial balance difference are identified and corrected. The balance in the suspense account will be eliminated by the correcting entries.

Preparation of Suspense Account:

If the debit side of the trial balance is greater than the credit side, the difference is placed on the credit side of the suspense account. If the credit side is greater, the difference is placed on the debit side of the suspense account.

Example: If the trial balance credits are N5,000 less than the debits, a suspense account will be opened with N5,000 credit.

Correcting entries are then posted to the suspense account and the respective ledger accounts. When all errors are found, the suspense account will have a zero balance.

Teaching Methods/Instructional Techniques

Discussion, Lecture, Demonstration, Question and Answer, Visual Aids

Instructional Procedures

Step 1: Introduction

Time: 5 minutes
Teaching Skill: Set Induction/Review
Teacher’s Activity: The teacher greets the pupils and reviews the previous lesson on trial balance. The teacher then asks pupils if they think accounting records can ever contain mistakes and how such mistakes might be handled. This leads to the introduction of the topic: Correction of Errors.
Pupils’ Activity: Pupils respond to questions and listen attentively to the introduction of the new topic.
Learning Point: Pupils recall previous knowledge and are prepared for the new lesson.

Step 2: Errors Not Affecting Trial Balance

Time: 10 minutes
Teaching Skill: Explanation/Illustration
Teacher’s Activity: The teacher explains what errors not affecting the trial balance are. The teacher then lists and explains each type of error (omission, commission, principle, compensating, original entry, complete reversal) with simple examples on the whiteboard.
Pupils’ Activity: Pupils listen, take notes, and ask questions for clarification.
Learning Point: Pupils understand different types of errors that do not cause a trial balance to disagree.

Step 3: Correction of Errors

Time: 10 minutes
Teaching Skill: Demonstration/Problem Solving
Teacher’s Activity: The teacher demonstrates how to correct errors not affecting the trial balance using journal entries. For example, correcting an error of principle where furniture purchase was debited to purchases account.
Pupils’ Activity: Pupils observe the teacher’s demonstration, copy examples, and attempt to follow the logic of the correcting entries.
Learning Point: Pupils learn the practical method of correcting errors using journal entries.

Step 4: Suspense Account – Definition and Purpose

Time: 5 minutes
Teaching Skill: Explanation
Teacher’s Activity: The teacher defines a suspense account and explains its purpose as a temporary account to balance the trial balance when errors are present. The teacher also lists reasons why a suspense account may be opened.
Pupils’ Activity: Pupils listen, take notes on the definition and purpose of a suspense account.
Learning Point: Pupils understand what a suspense account is and why it is used.

Step 5: Preparation and Clearing of Suspense Account

Time: 10 minutes
Teaching Skill: Demonstration/Application
Teacher’s Activity: The teacher presents a simple scenario where a trial balance does not agree and demonstrates how to open a suspense account. The teacher then shows how correcting entries (for single-sided errors) are posted to the suspense account to clear its balance.
Pupils’ Activity: Pupils observe the demonstration, follow the entries, and ask questions about the process.
Learning Point: Pupils learn how to prepare and clear a suspense account.

Step 6: Evaluation/Review

Time: 5 minutes

Teaching Skill: Questioning/Assessment

Teacher’s Activity: The teacher evaluates the learning by asking the following questions:

1. Define an error of omission.
2. Mention three types of errors that do not affect the trial balance.
3. What is the purpose of a suspense account?
4. State one reason why a suspense account might be opened.

Pupils’ Activity: Pupils answer orally and in writing.

Learning Point: Pupils demonstrate understanding of the lesson.

Step 7: Conclusion

Time: 0 minutes
Teaching Skill: Summarization
Teacher’s Activity: The teacher briefly summarises the key points of the lesson, emphasizing the importance of accurate record-keeping and error correction. The teacher gives an assignment to be completed before the next class.
Pupils’ Activity: Pupils listen to the summary and copy down the assignment.
Learning Point: Pupils consolidate their understanding and prepare for further practice.

Lesson Keywords

• Error of Omission – A transaction completely left out of the books.
• Error of Commission – A transaction recorded in the wrong account of the same class.
• Error of Principle – A transaction recorded in the wrong class of account.
• Compensating Error – Two or more errors that cancel each other out.
• Suspense Account – A temporary account used to balance the trial balance when it does not agree.

Differentiation

For pupils who grasp the concepts quickly, the teacher will provide more complex scenarios involving multiple errors for correction. For pupils needing more support, the teacher will provide simplified examples and offer individual guidance during practice sessions.

Note for teachers using this lesson plan

Ensure to use clear and relatable examples when explaining each type of error. Practical demonstrations on the board for journal entries and suspense account preparation are essential for pupils to understand the application of concepts. Encourage pupils to actively participate by asking questions and attempting corrections.