What are the errors and the types of errors?
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Answer / srinivas annavarapu
Errors are the mistakes done in posting entries or balances
without understanding the principles or the purpose or most
of the times by hurry / negligence.
Mainly there are two types of errors
1. Errors of Principles
If a transaction is recorded against the fundamentals
of accounting
Ex: Revenue expenditure booked under Capital expenditure
2. Clerical errors
these can be
a) Errors of omission: A transaction is partially /
wholly not recorded in the books of accounts
b) Errors of commission : when an amount recorded
wrongly in to books of accounts Ex: Rs.510 paid
towards salary is recorded as Rs.150
c) Compensating errors: Sometimes an error is counter-
balanced by another error in such a way that it is
not disclosed by the trial balance. Such errors are
called compensating errors.
| Is This Answer Correct ? | 32 Yes | 5 No |
Answer / bhupala krishnaiah .d
Errors are the mistakes
TYPES ARE
1. Errors of Principles
2. Clerical errors
a) Errors of omission
b) Errors of commission
c) Compensating errors
| Is This Answer Correct ? | 20 Yes | 2 No |
Answer / suresh mistry
2. Errors can be classified into the following four categories on the basis of the nature of errors and explained here under
Errors of commission
Errors of omission
Errors of principle
Compensating (offsetting) errors
Errors of Duplication
Errors of Commission
These errors by definition are of clerical nature. These errors may be committed at the time of recording and/or posting. At the time of recording, the wrong amount may be recorded in journal which will be carried throughout. Such errors will not affect the agreement of the trial balance. These errors may also be committed at the time of posting, by way of posting wrong amount, to the wrong side of an account or in the wrong account. The errors resulting in posting to wrong account will not affect agreement of trial balance, whereas, other errors of posting will resulting disagreement of trial balance.
For example, an amount of Rs. 10,000 received from customer (Debtor) is correctly recorded on the debit side of the cash book but while posting, the customer's account is credited with Rs. 1,000. This is an error, which is committed at the time of posting, by posting wrong amount to the account. This will result in disagreement of trial balance, since, the credit total of the trail balance will be short by Rs. 9,000.
Errors of Omission
The errors of omission may be committed at the time of recording the transaction in the books of original entry or while posting to the ledger. An omission may be complete or partial. Such errors are known as errors of omission.
For example, Machinery purchased for Rs. 50,000 by issuing a cheque is recorded first in the credit side of cash book, in the bank column. Suppose it is not posted to the debit of machinery account, it is an error of partial omission. The trial balance will not tally. Suppose the transaction is not entered in the cash book and hence ignored completely, this is a case of complete omission. It means as if the transaction has not taken place at all. It will not affect the trial balance and hence the trial balance will tally. This is true only in case of complete omission.
See also:
Trial Balance Error
Steps taken to identify errors of the trial balance, Identifying the errors of the trial balance, Overcoming with the errors of the Trial Balance...
Errors of Principle
Accounting entries are recorded as per the generally accepted accounting principles. If any of these principles are violated or ignored, errors resulting from such violations are known as errors of principle. As an illustration, Periodicity principle requires maintaining proper distinction between capital and revenue items. An error of principle may occur due to incorrect classification of expenditure or receipts between capital and revenue. This is very important because it will have an impact on financial statements. It may lead to under/over stating of income or assets or liabilities, etc.
For example, amount spent on additions to the buildings should be treated as capital expenditure and must be debited to the asset account. Instead, if this amount is debited to maintenance and repairs account, it is treated as a revenue expense. This is an error of principle. Since instead of asset account, i.e. buildings, the maintenance and repairs account (expense) is debited, the trial balance will still tally but would not be correct as per generally accepted accounting principles.
Such errors are not disclosed by the trial balance. This will result in understating of income due to extra charge under maintenance and repairs account and understating the value of buildings in the balance sheet.
Compensating Errors
When two or more errors are committed in such a way that the net effect of these errors on the debits and credits of accounts is nil, such errors are called compensating errors. They do not effect the tallying of the trial balance.
For example, In a credit sale transaction, the sales account is credited in excess by say, Rs.5,000 and similarly the suppliers account in case of a credit purchase is understated by Rs.5,000, this is a case of two errors compensating for each others effect. It is to be noted that extra credit to the sales account is offset by lower credit to the creditor's account, both being credit balance. Since, one plus is set off by the other minus, the net effect of these two errors being of compensating nature and do not affect the agreement of trial balance.
Errors of Duplication
Such errors arise when an entry in a book of original entry has been made twice and has also been posted twice.
| Is This Answer Correct ? | 14 Yes | 0 No |
Answer / praveen kumar
Errors are nothing but mistakes, which we makes while entry
passing or posting.
Types of Errors :
1. Errors disclosed by Trail Balance (one-sided errors)
2. Errors Not disclosed by Trail Balance (two-sided errors)
| Is This Answer Correct ? | 9 Yes | 6 No |
Answer / syeda jahanara shah
Errors are the mistakes are committed in the accounting
process.There are 3 types of Errors. They are error of
principle and error of clerical.Error of clerical are
divided into three types , Error of Omission , Error of
commission and compensating errors. again Compensating
errors are divided into error are disclosed by trial
balance , error are not disclosed by trial balance.
| Is This Answer Correct ? | 3 Yes | 0 No |
Answer / bhavya
Errors are the mistakes are committed in the accounting
process.There are 3 types of Errors. They are error of
principle and error of clerical.Error of clerical are
divided into three types , Error of Omission , Error of
commission and compensating errors. again Compensating
errors are divided into error are disclosed by trial
balance , error are not diclosed by trial balance.
| Is This Answer Correct ? | 5 Yes | 3 No |
Answer / nagesh
Error of commission
Error of omission
Error of Duplication
Error of Violation of Principal of Accounts
| Is This Answer Correct ? | 3 Yes | 10 No |
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