Error of Transposition

What is Transposition error? Transposition error is an error occurs by the reversal of digits such as recording 87 for 78, or 420 for 402. A slide is the entry of a number with an incorrectly placed decimal points, such as recording 2,170 for 21,700, or 4,500 for 450. How to locate and Rectify Transposition … Read more

Rectification of errors

What is the Rectification of errors? In accounting, errors are the ‘mistakes’ committed by the book-keeper or accountant. These mistakes may occur while classifying the accounts, writing the subsidiary books, posting the entries to ledger accounts, casting totals, balancing the accounts, carrying the balances forward and so on. The process of finding and correcting these … Read more

Errors of omission

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. or 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 … Read more

Errors of commission

Errors of Commission – Definition These types of errors occur due to the negligence of book-keeper, clerk or accountant. As errors of commission are often caused due to the mistake committed by the clerk, they are also called as clerical errors. Also known as error of inadvertence. If we debit or credit an account, other … Read more

Errors of principle

Errors of principle – Definition Errors of principle are caused due to a book-keeper’s or an accountant’s ignorance or improper understanding of principles of accounting. This error resembles error of commission, except in one respect. Errors of commission usually result in an oversight whereas an error of principle is caused by a lack of knowledge … Read more

Errors in original entry

Explanation If a transaction is recorded at an incorrect amount in the subsidiary book, both the debit and credit entries made subsequently in the ledger would be incorrect though equal in figures. This will obviously not affect the trial balance. Effect on accounts This will be either of the following: If the transaction is recorded … Read more

Complete reversal of entries

Explanation If a transaction is so recorded that the account to be debited is credited and the account to be credited is debited, both with the correct amount, the debit and credit entries in the ledger would be equal and the trial balance will remain unaffected. Effect on accounts The account to be debited is … Read more

Compensating errors

Compensating Errors – Definition In the case of compensating errors, we observe that one of the errors already committed being offset by another error or more than one errors. That means, compensating errors are caused due to the errors committed to compensate each other or offset each other. Explanation of Compensating Errors In fact, when … Read more