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(a) Errors of omission: Under this type (d) Errors of original entry: This type
of error, a transaction is completely of error occurs where the original
omitted in the financial records. This transaction is incorrectly recorded in
means a transaction has occurred the book of account with the incorrect
but was not recorded anywhere in amount in both the debit and credit
the books of accounts. For example, entries (double entry system). For
FOR ONLINE READING ONLY
purchases from MUPSA Co. Ltd worth example, cash purchases of TZS
TZS 200,000 have not been recorded 23,000,000 is being wrongly recorded
in the cash book (original entry) as
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in any books of accounts. Since no TZS 32,000,000 and the same is being
records have been made in the books posted to the purchases account. The
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of account, then the trial balance would trial balance totals would still balance.
still balance.
(b) Errors of commission: These errors (e) Compensating errors: These errors
occur when the correct transaction occur when two different mistakes,
amount is posted in the wrong account such as posting the amount in the books
but in the same class of accounts. of accounts, are made but they offset
For example, a sale of goods worth or cancel each other. For example, the
TZS 11,000,000 to Chacha Godfrey sales account was over added by TZS
is entered in the account of Kasim 70,000 and the purchases account was
Godfrey. Another example is a payment also over added by the same amount.
of wages, TZS 400,000, posted to the These two errors would then offset or
rent account. In both cases, the correct cancel each other in the trial balance.
transaction amounts were posted to the This is because the totals of both
wrong or different accounts of debtors the debit and credit sides of the trial
and expenses, respectively. Due to this,
the trial balance will balance without balance will be TZS 70,000 more.
the errors being noticed because both (f) Complete reversal of entries: These
accounts’ balances will appear on the errors occur when a transaction is
same sides. posted in the correct accounts but on
(c) Errors of principle: These are errors the wrong side. For example, cash sales
which occur when the transactions are of TZS 800,000 might be incorrectly
posted in the wrong class of account, credited in the cash book and debited
but of the same balance characteristics.
A good example for this is when the in the sales account. Despite this
purchase of a non-current asset, such error, the trial balance totals would
as a motor van is being debited to still agree because the same amount
an expense account, such as motor is debited and credited, albeit in the
expenses account. wrong accounts.
Student’s Book Form Five
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