CAT / FIA FFA Syllabus E. Preparing A Trial Balance - Types of error - Notes ^{1 / 4}

Types of error which may occur in bookkeeping systems

The following are five frequent types of error

1. Errors of transposition

   When two digits in an amount are accidentally recorded the wrong way round.

2. Errors of omission

   Failing to record a transaction at all, or making a debit or credit entry, but not the corresponding double entry.

3. Errors of principle

   Making a double entry in the belief that the transaction is being entered in the correct accounts, but subsequently finding out that the accounting entry breaks the 'rules' of an accounting principle or concept.

4. Errors of commission

   Where the bookkeeper makes a mistake in carrying out his or her task of recording transactions in the accounts. Two examples are: - putting a debit/credit entry in the wrong account; errors of casting (adding up)

5. Compensating errors

   Errors which are, coincidentally, equal and opposite to one another.

Errors corrected by journal entry

Some of these errors can be corrected by journal entry; some require the use of a suspense account.

• If the correction involves a double entry in the ledger accounts, then it is done by using a journal entry in the journal.

• When the error breaks the rule of double entry (single entry or error on one side only), then it is corrected by the use of a suspense account as well as a journal entry.