Types of Errors

BY : PROF . MEGHA SHAH (NRIBM GLS)

Types of Errors

Error of Principle

Error of Omission

Error of Commission

Compensating errors

Types of Errors
1. Errors of Principle

In accounting, if accountant records any transaction against the rules of double entry system, then this mistake is called error of principle. For example, accountant takes all capital expenditures as revenue expenditures and passes the entry of machinery purchased in purchase account. 2. Clerical Errors We can separate clerical mistakes with following ways:

a) Errors of Omission
If accountant forgets to pass the journal entry of any transaction or if he records only one part of transaction, then these mistakes are called errors of omission. Accountant can also forget to post any journal entry in ledger accounts.

Conti
b) Errors of Commission If accountant passes the wrong entry or posts wrong side of ledger accounts or writes wrong amount or calculates wrong total of any account, then these types of mistakes are called errors of commission. Some of errors of commission can easy find out by making trial balance but some errors of commission can not find out through trial balance.

c) Compensating Errors
Sometime we compensate one error with any other errors. For example we write Rs. 500 less in the credit side of sales account but same time we write less Rs. 500 in the debit side of purchase account. This is the error which can not be revealed through trial balance.

Ways to find out Errors in trial balance

If the debit & credit balance of trial balance do not agree, the following types of errors are possible.
Recording different amounts for debit & credit in the journal. Posting a debit as a credit & vice versa. Computing an account balance incorrect. Copying the amount of an account balance in trial balance

incorrect. Copying a debit balance in an account as a credit & vice versa in the trial balance. Omitting an account balance in trial balance. Totaling the trial balance incorrectly.