Explain the impact of the missing journal entry on the financial statements of the company?

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Connor Sephton answered
The problems created by missing a journal entry on the financial statements of a company really depends on what sort of journal entry was missed.

In the event of a journal entry being more of a reclassification of a particular expense that has been transferred from a single account, the repercussions of missing this entry would not be all that severe. This could very well be information that already exists in the journal, and simply forgetting to reinstate this in a later journal entry is quite careless but not particularly dangerous or harmful in the slightest.

However, in the event of a large financial action taking place, missing the journal entry could be potentially quite harmful. For example, if the statements do not display a correctly stated balance, this misleading information could create great confusion within the company. It could lead to a particular action being taken or a certain decision being made that did not have to happen.

Likewise, if an amount of money that has been paid into the account is not displayed in the journal entry on the financial statements, this could equally cause problems. If the company has not got records in the journal of this particular income, then they are going to question the establishment that has already paid them. This confusion could cause to unnecessary friction between companies that could easily have been avoided if the journals had been kept up to date, accurate and complete.

The repercussions around missing a journal entry on financial statements depend mostly on what is at stake as a result of the missed entry. However, in the event of a missed entry being discovered, it is important that the financial statements are retracted and republished once the error has been amended.

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