Four Types of Accounting Errors

                  We often do unknowingly or knowing some errors while accounting and then it becomes our headache thinking that where we went wrong. So today let us try to understand the different types of errors that takes place while accounting and also how do they occur.

Accounting Errors

          It means that the unintentional errors that takes place while keeping the books of accounts is known as Errors of Accounting.

Types of Accounting Errors

                       Accounting errors can be classified into four errors. They are

§  Errors of Omission

§  Errors of Commission

§  Compensating Errors.

§  Errors of Principles.

Now let us understand them one by one in detail

§  Errors of Omission:

The name of error its self says that omission which means something has been not recorded in books of accounts. This error refer to those errors which takes place by not recording a transaction in the books of accounts or subsidiary books. For instance, A transaction has been recorded in the subsidiary books but has be omitted while posting to ledger, This error refers to error of omission.

§  Errors of Commission:

This error refer to the error where the amount recorded in books of accounts is wrong. In order to understand this error let see the example Goods of worth Rs 2150/- is purchased and is recorded in the subsidiary books as Rs 1250/- instead of Rs 2150/-. Such kind of error is called Error of Commission.

§  Compensating Errors:

This is the error where one error neutralizes or compensates the effect of another error. In other words one error is counter balanced by set off set counter by counter another error  is called compensating error.

§  Errors of Principles:

This is the error where a transaction is recorded against the fundamental system of double entry. Thus this error is error of principles.

Rectification of Errors:

It means that the removal of effect of errors in the books of accounts by restoring the correct entries in the books of accounts.