Audit the accounting cycle and correct recording errors

Locate the failed stage

A questioned statement balance is an endpoint. Trace it backward to the adjusted trial balance, ledger account, posted journal line, and source evidence. Name the first stage whose record differs from the supported event. This method separates an omitted event from a wrong entry, wrong posting, missing adjustment, or incomplete close.

An unequal trial balance narrows the search to errors that changed debit and credit totals differently. Equal columns still permit an omitted or duplicate entry, the same wrong amount on both sides, a wrong account on the correct side, or a wrong reporting date.

Correct the effect that is wrong

Suppose a $2,400 two-year insurance payment was debited to Insurance Expense and correctly credited to Cash. Debit Prepaid Insurance and credit Insurance Expense for $2,400. Cash was already correct, so reversing and recording the entire payment again adds needless lines and hides the precise failure.

Keep the original entry, correction, date, explanation, and supporting evidence. A correction changes account balances; it does not erase the audit trail.

Exit check

For each suspected error, state the failed cycle stage and whether trial- balance equality can reveal it. Name the evidence needed to confirm it and the smallest entry that restores the supported balances.