Accounting errors are classified broadly into two groups: those that affect the agreement of a trial balance and those that don't. A trial balance will not be affected if the total of all debit entries in the ledger is equal to the total of all credit entries. Therefore, if, despite an error, debit entries remain equal to credit entries, the trial balance will agree and hence fail to disclose the presence of an error. Errors that do not affect the agreement of a trial balance are: If an error results in unequal debit and credit entries in the ledger, the trial balance will fall out of agreement and thereby disclose the presence of the error. Such errors are usually the result of clerical oversight. The following are the common ones:Errors Leaving the Trial Balance Unaffected
Errors Affecting the Trial Balance
Classification of Errors in Accounting FAQs
Errors in the subsidiary accounts are classified as either omissions or commissions.
Errors in posting to the ledger can be misplacement of entry, miscast entries (entering the wrong figure), failure to post (omission of posting) and arithmetical errors (in balancing the account).
Errors in equitable allocation of charges or credits are classified as errors of principle or error in original entry.
Arithmetical errors in accounting for stock, spoilage and wastage are divided into two classes: those that affect the Trial Balance and those that do not. Those that affect the Trial Balance are complete reversal of entries and mistakes in posting. Those that do not affect the Trial Balance are errors of principle.
Error in original entry can be misplacement of figures (posting an incorrect figure) and miscast (entering an incorrect figure).
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.
