Error in Balancing an Account
If an arithmetical error is made while balancing a ledger account, the error will be confined to that one particular account only. However, this will cause the two sides of the trial balance to give different totals. This error may result in:
- Either the account showing a balance larger than the correct balance, i.e. an over-debit (if it is a Dr. balance) or an over-credit (if it is a Cr. balance)
- The account showing a balance smaller than the correct balance, i.e. an under-debit (if it is a Dr. balance) or an under-credit (if it is a Cr. balance)
To correct an over-debit, or an under-credit, we will need to credit the account with the amount of difference. Similarly, to correct an under-debit or an over-credit, we will need to debit the account with the amount of difference. The corresponding entry, in both cases, would be in the suspense account.
About the Author
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True contributes to his own finance dictionary, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.