CORRECTION OF ERRORS

Major types of errors

There are two (2) main types of errors:
(1) Those that DO NOT affect the Trial Balance agreement
(2) Those that affect the Trial Balance agreement
In this section we will be focusing on the first type: Those that do not affect the Trial Balance
agreement.
Remember that the Trial Balance is used to spot any errors that may have been made in the
double-entry process:
If the Trial Balance does not balance then we know that a mistake was made somewhere.
But as this topic shows us, errors can still occur even if a trial balance agrees.
SEVEN (7) Errors that do not affect the Trial Balance agreement.
1. Error of Omission: Where the transaction is not entered at all
2. Error of Commission: Wrong PERSON’S account is used
3. Error of Principle: Wrong CLASS of account (asset instead of liability)
4. Error of Original Entry: Wrong amount is used when entering transaction.
5. Compensating error: Errors on the debit side and credit side cancel each other off
6. Transposition error: The digits of the dollar amount are mixed up, e.g. $710 instead of
$701
7. Complete reversal of entries: The account that was supposed to be debited was credited
and vice versa
With the exception of the error of omission there are really only FOUR (4) main
classifications of types of errors:

 No account entry #1

• Wrong ACCOUNT: #2, 3, & 7

• Wrong AMOUNT: #4 & 6
• Combination of either Wrong amount or wrong account

*HOWEVER: You DO HAVE TO KNOW all the seven types and be able to spot them and
name them (especially in MCQ).
HOW TO CORRECT ERRORS
The process is actually very simple IF you have your pre-knowledge and USE YOUR
BRAIN ACTIVELY while attempting the questions:
• Read and understand the transaction (this is CRITICAL)
• Identify the error(s) made (amount AND/OR account)
• Correct the error: UNDO the wrong and DO the right (this usually involves
removing/reducing debits/credits)

To UNDO a debit: Credit the account

To UNDO a credit Debit the account
Yes, this process seems very simple and it is deceptively so. Remember there are
technically only TWO things that you can do in double entry: - Debit and Credit

1. Error of Omission: Where the transaction is not entered at all

2. Error of Commission: Wrong PERSON’S account is used
3. Error of Principle: Wrong CLASS of account (asset instead of liability)
4. Error of Original Entry: Wrong amount is used when entering transaction
5. Compensating error: Errors on the debit side and credit side cancel each other off
6. Transposition error: The digits of the dollar amount are mixed up, e.g. $710 instead of
$701
7. Complete reversal of entries: The account that was supposed to be debited was credited
and vice versa.

TO CORRECT THE ERRORS

• Read and understand the transaction (this is CRITICAL)
• Identify the error(s) made (amount AND/OR account)

 Correct the error.