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Errors Notes

The document outlines various types of accounting errors that do not affect the trial balance, including errors of commission, complete reversal, omission, original entry, principle, and compensating errors. Each error type is illustrated with examples showing correct and incorrect entries. Understanding these errors is crucial for accurate financial reporting and analysis.

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taurofiona09
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6 views2 pages

Errors Notes

The document outlines various types of accounting errors that do not affect the trial balance, including errors of commission, complete reversal, omission, original entry, principle, and compensating errors. Each error type is illustrated with examples showing correct and incorrect entries. Understanding these errors is crucial for accurate financial reporting and analysis.

Uploaded by

taurofiona09
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Errors which don’t reflect in the trial Balance

1. Error of Commission – Wrong Account of Same Class; Recorded on the correct side with the
correct amount

Eg: Cash received from Rohan recorded as received from Sohan

Correct Entry Wrong Entry


DR – Cash DR – Cash
Cr – Rohan Cr- Sohan

2. Complete Reversal – Wrong side of both accounts; Account names and the amount is correct

Eg: Paid Rent, but credited to rent account and Debited cash

Correct Entry Wrong Entry


Dr- Rent Dr –Cash
Cr- Cash Cr - Rent

3. Error of Omission – Transaction not recorded

Eg: Salary paid not Recorded

Correct Entry Wrong Entry


Dr – Salary Not recorded
Cr- Cash

4. Error of original entry – Wrong Amount; Recorded with correct name and correct side

Eg: Goods worth $1000 purchased for cash, recorded as $100

Correct Entry Wrong Entry


Dr – Purchases 1000 Dr – Purchases 100
Cr – Cash 1000 Cr – Cash 100

5. Error of Principle – Wrong name of different class; Recorded with correct amount on correct side

Eg: $1000 paid for repair of motor vehicle but recorded under motor vehicle

Wrong Entry
Dr – Repair of Motor vehicle (Expenses) Dr –Motor vehicle (Asset)
Cr – Cash Cr - Cash

6. Compensating errors – One error compensates another error

Eg: Purchase of 1000 recorded at $900 and sales returns of 500 at $600

Correct DR DR CR
Furniture 10 000 10 000
Cash 5 000 5 000
Capital 16 500
Purchases 1 000 900
Sales Return 500 600
16 500 16 500 16 500

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