Correction of errors

Question 1

What are the six errors not disclosed by a trial balance?

Answer 1

Errors of omission
Errors of commission
Compensating errors
Errors of principle
Errors of original entry
Complete reversal

Question 2

What is a trial balance a list of?

Answer 2

The trial balance is a list of all the balances taken from the ledger accounts.

Question 3

What is an error of omission?

Answer 3

If a transaction is completely missed out, then the trial balance will still balance at the wrong amount.

Question 4

What is an error of commission?

Answer 4

If a debit or credit entry has been correctly posted to the correct side but to the wrong account then the trial balance will still agree but be incorrect. For example, if £50 is posted to the debit side of S Bird instead of to the debit side of S Thain this will not affect the balancing of the trial balance but it will be incorrect.

Question 5

What is a compensating error?

Answer 5

If one account has been over added by £20 and another account has been under added by £20, then one mistake compensates another and the trial balance total match, but 2 accounts will be incorrect.

Question 6

What is an error of principle?

Answer 6

When an item is entered in the wrong class of account eg of the purchase of an asset is debited to motor expenses instead of motor vehicles.

Question 7

What is an error of original entry?

Answer 7

If the original entry is incorrectly entered eg £24 instead of £42, then the error will not result in the trial balance failing to agree.

Question 8

What is complete reversal?

Answer 8

All entries for a transaction have been put in the wrong columns.