Types of Errors in Accounting
It is not really possible to draw up a complete list of all the errors which might be made by bookkeepers and accountants. Even if you tried, it is more than likely that as soon as you finished, someone would commit a completely new error that you had never even dreamed of,
However it is possible to describe five types of error which cover most of the errors which might occur.
They are follows,
- Errors of transposition
- Errors of omission
- Errors of principle
- Errors of commission
- Compensating errors
Once an error has been detected, it needs to be put right.
- 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, then it is corrected by the use of a suspense account as well as a journal entry.