If this transaction is not recorded in the books of account the agreement of a trial balance remains unaffected. The amount written in the journal for a particular transaction may be greater or smaller in the ledger accounts and the debtor is treated as creditor and creditor as a debtor, such types of mistakes are called errors of commission. This error is called the self-rectifying error.
An error rectified by one or more errors is called compensating error. In maintaining accounts of transactions some errors may happen due to lack of sound knowledge of accounting principles.
Capital expenditure treated as revenue expenditure if the repairing expense of a machine is treated as the cost of machinery.
The errors for which a trial balance disagrees are of the wider range. Generally, these are divided into three groups;.
Two sides of ledger accounts are totaled for finding outbalance; of the accounts. Errors committed to totaling lead to errors in balancing. For Example; while transferring from the journal if a transaction is recorded in only one account in the ledger or recorded on the wrong side of an account or wrong amount is posted in an account.
The errors, which, affect only one side of accounts, are termed one-sided errors. But if the Trial Balance does not tally, then there could be errors in transaction entry. These can be:. There are certain types of errors that will not affect tallying of the Trial Balance. These are as follows:. For the type of errors mentioned above, the identification process is very time-consuming.
Only strict vigil and ongoing audit of entries could minimize such errors. Of course, the computerized accounting packages such as Tally. ERP 9 systems do provide built mechanisms to avoid occurrence of these mistakes. Error of principle is when the right amount of a transaction is entered into the correct side of the wrong class in the account.
For instance, the purchase of a motor vehicle fixed asset is recorded in the Motor Vehicle Expenses Account a revenue expenditure account. This is when two or more errors of equal amounts occur on both sides. Where the correct accounts are used but each item is shown on the wrong side of the account. Transposition errors is where the wrong sequence of the individual characters within a number was entered.
Tutor at Business School Brunei. Errors of trial balance. Trial balance and Types of Errors. Correction Of Errors. Correction of accounting errors.
General ledger and trial balance. Trial balance and errors. Trial Balance. Rectification of errors for class XI. Accountancy for Class XI. Acc principles of accounting focus of the final pape1. Related Books Free with a 30 day trial from Scribd.
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