Question

give exaple for each type of error:

1- error of omission

2- error of commission

3- error of principles

4- error of original entry

5- error of reversal entries

6- addition errors

7- posting error

8- trial balance errors

9- compensating

Answer 1

ERROR OF OMMISSION:

For example, credit sales to Joya Rs. 10,000, not entered in the sales book and in Joya's account also. When the recording of transaction is partly omitted from the books, it is an error of partial omission. If in the above example, credit sales had been duly recorded in the sales book but the posting from sales book to Joya’s account has not been made, it would be an error of partial omission.

ERROR OF COMMISSION:

For example: XYZ Inc paid Rs. 25,000 to ABC Inc (a supplier of goods). This transaction was correctly recorded in the cashbook. But while posting to the ledger, ABC Inc’s account was debited with Rs. 2,500 only. This constitutes an error of commission.

ERROR OF PRINCIPLES:

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 has been treated as a revenue expense. This is an error of principle. Similarly, if a credit purchase of machinery is recorded in purchases book instead of journal proper or rent paid to the landlord is recorded in the cash book as payment to landlord, these errors of principle.

ERROR OF ORIGINAL ENTRY:

This error may have both example of error of ommission and error of Commission.

For example, XYZ Inc paid Rs. 25,000 to ABC Inc (a supplier of goods). This transaction was correctly recorded in the cashbook. But while posting to the ledger, ABC Inc’s account was debited with Rs. 2,500 only. In this original entry passed with a wrong amount so it is an error of original entry. Similarly, Credit sales to JOYA for 10000 and credit sales had been duly recorded in the sales book but the posting from sales book to Joya’s account has not been made, it would be an error of partial omission as well as error of original entry as original entry to record credit sale is wrong.

ERROR of REVERSAL ENTRY

For example, Machinery purchased for 50000 and debited in Purchase account, this error is an error of original entry. While to nullyfi the effect of this wrong entry a Reversal entry is passed ie. Machinery account debited and cash account credited. in this situation reversal entry is also wrong so this error is an error of reversal entry. now rectifieng entry would be cash account debited and purchase account credited.

ADDITION ERRORS

Addition errors is also comes in Error of Commission.

For example when a page is completed and the account is carried forwarded to next page than total of previous page is brought forward and this error in total is an error of Addition.

POSTING ERRORS

Posting errors is also comes in Error of Commission.

For example, credit sales to ABC Inc of 25000 which is recorderd correctlly but while posting in Account it was posted in XYZ Inc. This error is an error of posting.

TRIAL BALANCE ERRORS

Errors which affect trial balance or mathemetical error in trial balance.

For example, Total of Debit side of trial balance is 100000 but written as 10000 this is an mathemetical error. Similarily Credit sale of good to ABC Inc is recorded in sale register but not entered in ABC Inc's account and affect the Debit side of trial balance.

COMPANSATING ERRORS

For example, if purchases book has been overcast by Rs. 10,000 resulting in excess debit of Rs. 10,000 in purchases account and sales returns book is undercast by Rs. 10,000 resulting in short debit to sales returns account is acase of two errors compensating each other’s effect. One plus is set off by the other minus, the net effect of these two errors is nil and so they do not affect the agreement of trial balance.

Please give us like to appreciate our efforts and comment for any Doubt.