Trial Balance & Errors

TRIAL BALANCE:
1. Is a summary of all the balances from the individual accounts in the ledgers. It acts as an arithmetical check on accuracy of the double-entry bookkeeping system, ensuring that accounting entries are error-free prior to the compilation of the final accounts.
Error of Commission:
1. Occurs when one or both double entries are made in the correct classification of account but entered under the wrong name.
  1. For Example: £100 - P.Smith instead of £100 - B.Smith
Error of Omission:
1. Occurs when both double entries for a transaction have been left out from the book of accounts.
  1. Transaction has not been records anywhere.
Error of Principle:
1. Occurs when one or both of the double entries are made in the wrong classification of account.
Compensating Error:
1. Where two or more opposing errors act to cancel each other out.
Error of Original Entry:
1. Where the double entry for a transaction have been recorded under the correct name but with the wrong amount.
Error of Reversal:
1. The entries have been made on the wrong side of accounts.
  1. has been put in the correct account but has been recorded as a debit instead of a credit.

Resource summary

	Created by hannahsophie.austin almost 11 years ago