Errors of Omission: Definition

When some transactions are completely omitted from the books of accounts or entered but not posted, they are treated as errors of omission.

If a transaction is omitted altogether from the books of accounts, there would be neither a debit nor a credit entry in the ledger. Hence, the trial balance will not be affected.

Types of Errors of Omission

There are two types of errors of omission:

Partial Omission

The transaction is recorded in the books but not posted to the ledger. This type of error can happen in any subsidiary book.

For example, goods purchased and returned to the supplier may be entered in the purchase returns book but not posted in the debit of supplier account.

Complete Omission

The transaction is completely omitted from being recorded in the books. For example, a transaction relating to the receipt of cash may not be recorded in the cash book.

Partial omissions are easy to locate, but this is not the case with complete omissions. One can only learn about such errors when the statement of accounts is received from or sent to creditors or debtors, as the case may be.

Effect on Accounts

The ledger will have no record of the transaction because there will be no debit or credit entry in the ledger.

Rectification of Entry

The transaction is recorded in the general journal in the same way that it would have been recorded when it originally took place. The reason for the delay is given in the narration.

Example

A credit note for $2,750, received from Hattar Wholesalers, was misplaced and not recorded in the books. It was discovered two months later on 21 July 2017. For this reason, the following rectification entry was made in the journal.

Rectification Entry in Journal

Frequently Asked Questions

What are errors of omission?

When some transactions are completely omitted from the books of accounts or entered but not posted, they are treated as errors of omission.

How do I know if I have made an error of omission?

The best way to determine if you have made an error of omission is to carefully check your work for any missing information. If you are unsure about something, ask a friend or colleague for help.

What is a partial omission?

The transaction is recorded in the books but not posted to the ledger. This type of error can happen in any subsidiary book.

What is a complete omission?

The transaction is completely omitted from being recorded in the books. For example, a transaction relating to the receipt of cash may not be recorded in the cash book.

What are the consequences of an error of omission?

The consequences of an error of omission can be serious, as it can result in misleading or inaccurate financial statements. It is important to rectify any errors as soon as they are discovered.

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