Types of Accounting Errors

Types of Accounting Errors

There are many reasons accounting errors occur in double entry bookkeeping (Also see Accounting – All you Need to Know about Double-Entry Bookkeeping). These errors occur accidentally as opposed to fraud cases which are intentional. Some accounting errors can be identified easily but while others are difficult to trace. For example if a trial balance shows different figures in the credit and debit side, you should know that there is an accounting error, and the error should be identified and corrected. Here are the types of accounting errors.

Error of Principle in Accounting

Error of principle in accounting (Also see Accounting Period Assumption and Matching Principle: Understand their Relationship) occurs when one violates the principle of accounting. A common error of principle is recording a transaction to an incorrect type of account. For example, an account records a sale of $1,000 to laundry expenses account. The error here is that the $1,000 was supposed to be credited in the sales account. Such an error can result in serious financial difficulties in your business.

Error of Commission

You are likely to make this mistake when you fail to record the correct amount in any entry in your accounting records. The other version of this error is that you fail to calculate the entry in bookkeeping when you add a figure that you were supposed to subtract instead.

Error of Omission

This type of accounting error occurs when a transaction is omitted either entirely or partially. For example, if you sold goods worth $400 to Eve and nothing was recorded in your books, then, this is error of omission.

Compensating Error

Compensating errors mutually compensate the effects of one another. For example, goods sold for $3,000 but recorded on the client’s account as $300. Similarly, goods purchased at $3,000 and wrongly recorded on the supplier’s account as $300. These errors compensate each other in your business accounts as $2700 deficit on the debit side of the client’s account and on the credit side of your supplier’s account.

Error of Original Entry

An error of original entry occurs when an incorrect figure is posted to the right account. A perfect example is a transposition error where the figures aren’t recorded in the right order. For example, instead of recording $2,500, record $5,200.

Complete Reversal of Entries

This is error occurs when you make entries in the correct accounts but swap the figures for the debit and credit positions. The debit and credits will be interchanged to make the error correct itself and balancing the trial balance.


Any of these accounting errors result in inaccurate financial statements for a business (Also see Why you can’t afford to be poor at Bookkeeping?). Therefore, they should be avoided at all costs. Contact us today to enjoy the benefits from our accounting services in Singapore.

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