The term 'error' refers to unintentional mistakes in financial information, e.g. mathematical or clerical mistakes, oversight or misinterpretation  of  facts,   or  unintentional   misapplication of   accounting policies.

While recording transactions and events various errors may be committed unintentionally. When a journal entry contains an error, the entry can be erased or crossed out and corrected—if the error is discovered immediately. However, if the errors are detected after posting to ledger accounts, the correcting entries are made. The correcting entry is recorded in journal and posted to the general ledger exactly as regular entries are.


(i)      A repair expenses was erroneously debited to Plant and machinery on November 25. The error is discovered on December 31:

                  Corrective Entry: 31st Dec.     Repair Expenses A/c ———— Dr.

                                                                                                            To Plant and Machinery A/c  

                  The corrective entry shows a credit to plant and machinery to cancel of offset the erroneous debit to plant and machinery.

(ii)              A collection on account was erroneously credited to sales on Jan.1 The error is discovered on Mach 26.

                  Corrective Entry:  March 26 Sales Account              Dr.

                                                                                          To sundry Debtors A/c

                  The debit to Sales in the correcting entry offset the incorrect credit to sales in the erroneous entry.         The Credit to Account Receivable in the correcting entry places the collected amount where it belongs.


Some errors are counter balanced:-- Accounting errors that are undetected can affect a variety of items, including revenues and expenses for a given period. Some errors are counterbalanced by offsetting errors in the ordinary accounting process in the "next period. Such errors misstate net income in both periods, but by the end of the second period the errors are counterbalance, and they affect the balance sheet of only first period, not the second period.

Example: A payment of Rs. 10,000 in March 2003 for Rent for the month April 2003. Instead of recording it as prepaid rent, the payment was recorded as Rent Expenses.

The effect of this recording error would be to:

  1. overstate rent expenses for the year 2002-2003 and understate year-end assets by Rs. 10,000 for the first year end and
  2. Understate rent expense for the second year.


Errors  that are  not counterbalanced in the ordinary book-keeping  process  will  keep  subsequent balance sheets in error until specific correcting entries are made.

A Trial Balance is very good way of giving a clear indication of some mistakes that may be there. This will be shown immediately, if the totals of the two columns of the trial balance differ. Thus, trial balance is ­essential to ensure that mistakes do not remain unearthed. However, the agreement of trial balance do not show conclusively that no mistakes have remain undetected. Some errors will not be disclosed by the trial balance whereas some will be. An agreed trial balance, therefore, is only a reasonable proof of arithmetic accuracy of books


Apart from error in totalling the two columns of trial balance, the following mistakes will be shown up by the trial balance , because then the trial balance will not agree:

         (a) Mistake in transferring the balance of an account to Trial balance.

  (b) Omitting to write the balance of an account in the trial balance.

  ©   Mistake in balancing

  (d) Making an entry on the wrong side.

  (e)  A mistake in the casting of subsidiary books.

  (f)   Omitting to post the discount columns of the cash book.

In spite of the agreement of the trial balance, the following types of error will not be disclosed because they do not upset the equation: DEBIT = CREDIT.

Omitting to record a transaction entirely in subsidiary books.

A wrong entry in the subsidiary books.

  1. Posting an entry on the correct side but in the wrong account head
  2. An error of principle- where by an assets is transferred as an expense or liability is treated as an income.
  3. Compensating errors.


Ø              CLASSIFICATION OF ERRORS( most. imp)

a)                   Error of omission

Ø  A transaction entirely omitted to record in original books or partially omitted while posting.

b)                   Error of commission

Ø  Wrong posting either of amount or on the wrong side, or in the wrong account.

c)                   Error of principle

Ø  Wrong classification of expenditure or receipt

d)                   Compensating error

Ø  One error compensated by the error i.e. an error which cancels themselves out.


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