Citing an example in each case, briefly explain four types of bookkeeping errors which are not disclosed by a trial balance

Citing an example in each case, briefly explain four types of bookkeeping errors which are
not disclosed by a trial balance

Answers

i) Error of Commission
This is an error in which the accountant records a transaction in the correct class of
account, in the correct side but in the wrong name of the account.
For example, a sale of goods on credit to Kenyani was recorded by debiting Kenyani’s
account.

ii) Error of Principle
This is an error committed due to lack of accounting principles. That is, a transaction is
recorded in the wrong class of account, e.g. if a fixed asset such as motor van is debited to
an expense account such as motor vehicle expenses account.

iii) Error of Complete Reversal of Entries
This is where the correct accounts are used to record a transaction but each item is shown
on the wrong side of the account. For example, suppose we had paid a cheque to Ondieki
for Shs 200, the double entry of which is Cr. Bank Shs 200, Dr. Ondieki Shs 200, Dr.
Bank Shs 200. The trial balance totals will still agree.

iv) Compensating Errors
This is an error that occurs both on the debit side of an account and on the credit side of
an account and the figures are equal which cancel each other.
E.g Sales account was undercast by Shs 20,000 and Purchase ledger was undercast with
Shs 20,000. The net effect is neutral and the trial balance will still balance.

v) Error of original Entry
Where the original figure is incorrect, yet double entry is still observed using this
incorrect figure. An instance of this could be where there were sales of Shs 150 goods but
an error is made in calculating the sales invoice. If it were calculated as Shs 130 and Shs
130 and Shs 130 were credited as sales and debited to the personal account of the
customer, the trial balance would still “balance”.

vi) Error of omission
Where a transaction is completely omitted from the books, the trial balance will still
agree.

vii) Transposition Errors
Where the wrong sequence of the individual characters within a number was entered e.g.
385 instead of 358 in the debit and credit entries, the trial balance would still agree.

Kavungya answered the question on May 15, 2019 at 14:04

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Citing an example in each case, briefly explain four types of bookkeeping errors which are not disclosed by a trial balance

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