Errors can be
classified into four major categories on the basis of the nature of error as
discuss below;
classified into four major categories on the basis of the nature of error as
discuss below;
1. Errors of Commission
2. Errors of omission
3. Errors of principle
4. Errors of compensation.
Errors
of Commission: These
errors by definition are of clerical in 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. 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.
of Commission: These
errors by definition are of clerical in 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. 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.
Example
An amount of N10,000
received from a customer (Debtor) is correctly recorded on the debit side of
the cash book, but while posting the customer’s account is credited withN1,000.
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 trial balance will be short byN9,000.
received from a customer (Debtor) is correctly recorded on the debit side of
the cash book, but while posting the customer’s account is credited with
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 trial balance will be short by
Errors
of Omission:
These errors may be committed at the time of recording the transaction in the
books of original entry. While posting to the ledger. An omission may be
complete or partial. Such errors are known as errors of omission.
of Omission:
These errors may be committed at the time of recording the transaction in the
books of original entry. While posting to the ledger. An omission may be
complete or partial. Such errors are known as errors of omission.
Errors
of Principle: Accounting
entries are recorded as per their generally accepted accounting principle. 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. This error may occur due to incorrect classification of expenditures or
receipts between capital and revenue.
of Principle: Accounting
entries are recorded as per their generally accepted accounting principle. 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. This error may occur due to incorrect classification of expenditures or
receipts between capital and revenue.
Compensation
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 account is nil, such errors are
called compensation errors. They do not affect the tallying of the trial
balance.
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 account is nil, such errors are
called compensation errors. They do not affect the tallying of the trial
balance.