Last reviewed: July 2026.
Accounting errors can arise from omission, incorrect accounts, wrong amounts, reversed entries, timing mistakes or estimates. Some disturb the trial balance, while others remain hidden even though debits equal credits.
Why a balanced trial balance can still be wrong
A trial balance checks whether total debits equal total credits. It does not prove that transactions were complete, classified correctly or recorded in the right period. Many errors affect both sides equally and therefore leave the trial balance balanced.
Error detection requires reconciliations, document review, analytical procedures and understanding of the business—not only arithmetic agreement.
Error of omission
An error of omission occurs when a transaction is not recorded at all. Because neither debit nor credit is posted, the trial balance still balances. A missing supplier invoice understates both expenses or assets and liabilities.
Controls include sequential document checks, supplier statement reconciliations, cut-off testing and review of post-period payments.
Error of commission
An error of commission posts the correct type of transaction to the wrong personal or subsidiary account. For example, a receipt from Customer A is credited to Customer B. The control account may still agree while individual balances are wrong.
Customer and supplier statements, remittance details and account confirmations help identify these errors.
Error of principle
An error of principle records an amount in the wrong class of account, such as debiting equipment repairs to the equipment asset account. The double entry balances, but profit and assets are misstated.
Review of unusual capital additions, expense trends and account descriptions is important. Approval rules for capital expenditure reduce the risk.
Error of original entry and transposition
An error of original entry records the wrong amount in both accounts, such as entering a $540 invoice as $450. A transposition reverses digits and often creates a difference divisible by nine when only one side or one ledger is affected.
Invoice imaging, automated data capture validation and independent review can prevent or detect these errors.
Complete reversal of entries
A complete reversal records the correct amount in the correct accounts but with debit and credit reversed. For example, cash received from a customer is credited to bank and debited to receivables. The trial balance balances, but both accounts move in the wrong direction.
Reasonableness review and bank reconciliation usually expose the problem.
Compensating errors
Compensating errors are separate mistakes whose debit and credit differences offset each other. The trial balance balances by coincidence. For example, one expense is overstated by $500 while another debit is understated by $500.
Because the errors are unrelated, reconciliation and analytical review are needed. Never assume a balanced difference proves the underlying postings are correct.
Errors affecting the trial balance
One-sided postings, unequal amounts and incorrect casting can create a trial-balance difference. A suspense account may temporarily hold the difference while the cause is investigated. The suspense account is a diagnostic tool, not a permanent solution.
Search by checking arithmetic, journal totals, control-account reconciliations, opening balances and postings around the size of the difference.
Correction journals
| Error | Correcting approach |
|---|---|
| Expense wrongly capitalised | Debit expense; credit asset |
| Customer receipt posted to wrong customer | Transfer between customer accounts; no control-account change |
| Invoice omitted | Record the full original double entry |
| One-sided debit missing | Debit the correct account; credit suspense |
| Entry completely reversed | Reverse the wrong entry, then record the correct entry |
Every correction should include a clear narrative, source reference, preparer and approval. Do not erase the audit trail or overwrite a closed-period transaction without control.
Period and estimate errors
Some misstatements arise from cut-off, estimates or accounting policies rather than simple posting mistakes. Goods received before year-end may be omitted from purchases and payables, or depreciation may use an outdated useful life. These require judgment and may affect several accounts.
The correction method depends on materiality, whether prior financial statements were issued and the applicable accounting standard.
Preventive and detective controls
- Use controlled master data and role-based access.
- Require invoice approval and three-way matching.
- Reconcile bank, receivables, payables, tax and payroll accounts.
- Review suspense, clearing and unusual journal accounts.
- Lock closed periods and approve late journals.
- Run analytics for duplicates, round sums and unusual trends.
Computerised systems prevent some arithmetic errors but can repeat a wrong rule across thousands of transactions. Configuration and access controls are therefore critical.
Error-investigation checklist
- Quantify the difference and identify affected periods.
- Determine whether the trial balance is out of balance.
- Trace source documents and system audit logs.
- Prepare and approve correcting journals.
- Assess tax, reporting and control implications.
- Verify that the correction resolved the root cause.
After correcting the numbers, improve the process that allowed the error. Repeated corrections without control changes are a warning sign.
Related accounting guides
- Accounting Errors: Types, Corrections and Suspense Accounts
- Suspense Account: Error Correction with Worked Example
- Control Account Reconciliation: Worked Examples and Controls
Authoritative references
- ACCA: Suspense accounts and error correction
- ACCA: Computerised accounting systems — rationale for change
Practical takeaway
Use the trial balance as one check, not the final proof of accuracy. Reconcile detailed ledgers, inspect source documents, review unusual trends, post transparent correction journals and fix the control weakness that caused the error.