Errors Not Affecting Trial Balance

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on September 7, 2021

Errors not affecting trial balance can take several forms.

For example, a transaction may be entered in the subsidiary book at the wrong amount (i.e., error in original entry) and later debited or credited to the wrong account in the ledger (i.e., error of commission).

As another example, an item of capital expenditure may be treated as an item of revenue expenditure and, at the same time, the entries may be made in the ledger on the wrong sides of the accounts involved (i.e., complete reversal of entries).

The above errors, as well as other errors like these, should be treated as two errors. As such, two separate rectification entries should be passed to rectify them.

Example

An invoice for $1,450 was issued to Mr. Tom. It was entered at $1,400 in the sales book and later debited to Tom & Company’s account.

These are obviously two errors. First, there is an error in the original entry when an invoice for $1,450 was recorded in the sales book at $1,400. The second error occurred when Tom & Company’s account was debited instead of Mr. Tom’s account.
Rectification Entry for Errors Not Affecting Trial Balance

Note:

As a result of the above two entries, the total credit in the sales account increases from $1,400 to $1,450 (i.e., the correct amount of the invoice).

At the same time, the debit entry of $1,400 is removed from Tom & Company’s account, while Mr. Tom’s account is debited with a total of $1,450, which is the correct amount of the invoice.

True Tamplin, BSc, CEPF®

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.

To learn more about True, visit his personal website, view his author profile on Amazon, his interview on CBS, or check out his speaker profile on the CFA Institute website.

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