Errors in Accounting in detail

Accounting errors refers to the mistakes that are committed in bookkeeping and accounting. The accounting errors can occur either at the time of entering the transactions in journal or subsidiary books or at the time of posting in the ledger.

These errors have an impact on the final accounts. Therefore, it is necessary to detect & rectify these errors so as to determine the true and correct financial position of the firm at the end of accounting period.


Errors in accounting are broadly classified into two categories which are as follows:

  1. Error of principle
  2. Clerical errors

These are discussed below  :

ERROR OF PRINCIPLE  :- These errors occur when entries are made against the principles of accounting. As per accounting rules, for every debit, there should be a corresponding credit. If a transaction violates this rule, an error will occur & such an error is known as error of principle.  These errors do not impact the trial balance. This is because the amount is correctly posted on both debit and credit sides but, in incorrect accounts.

For eg: An asset is purchased and is recorded as an expense in the account.

CLERICAL ERRORS :- Clerical errors are those errors which arise due to mistakes committed by clerks while performing accounting work. These are of 3 types, namely –

  1. ERRORS OF OMISSION : When a transaction is not recorded by mistake in the books of accounts, it is called an error of omission. The omission may be partial or complete.

In case of complete omission , the transaction is completely omitted from the books of accounts. For example, omission to record goods sold to a vendor.

In case of partial omission, the transaction is recorded at the debit side and omitted to be recorded at the corresponding credit side. For example, Goods purchased from Mr. X, recorded in purchase book but no entry made in Mr. X’s account.


  1. ERRORS OF COMMISSION : Error of commission is an error that occurs when a bookkeeper or accountant records a debit or credit to the correct account but to the wrong subsidiary account or ledger. For example, money that has been received from a customer is credited properly to the accounts receivable account, but to the wrong customer.These errors impact the trial balance.


  1. COMPENSATING ERRORS : Compensating errors occur when one wrong entry neutralises the impact of another incorrect entry. These entries cancel the other error that is recorded.



In order to detect these accounting errors, various reconciliations should be conducted from time to time so as to correct them .

Bank reconciliations, for example, should be performed at monthly intervals. The best way to correct errors in accounting is to add a correcting entry. A correcting entry is a journal entry used to correct a previous mistake.

Of course , no company can completely prevent such accounting errors but by performing regular reviews and reconciliations they can be identified and corrected relatively quickly.

Accounting & Finance for Banking

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