The
trial balance only proves the equality of the debit and credit entries in the ledger. It
does not provide a conclusive proofs of
the absence of errors in the books of accounts.
Generally, the following types of
errors do not affect the trial balance
and cannot therefore be dictated by merely extracting a trial balance, since the
trial balance would still balance even
when any of the errors have been
committed. They include:
1.
Error Of Principle: this type of errors occurs
when a transaction is entered in a wrong class of account. It is a fundamental error which shows lack of knowledge of accounting
principle eg posting the purchases of
furniture (a fixed assist) to the
purchases ( as goods
bought for
resale ). This error is corrected
by debiting furniture accound and
crediting purchases
accounts.
2.
Error of
original entry: This
error is committed when an initial mistake is made by passing an
incorrect entry through the books of
original entry and then posting this wrong figure to the ledger account.
For example, entering a sale N2,600
to Amadu as n6,200 in the
books. To correct this error, Amadus account should be debited with
N3600 (N6200 –N2,600) and sales account credited with N3,600.
3.
Compensating
errors: a compensating error is committed when an incorrect
entry made on the debit side or credit
side of the ledger is compensated
by an equal incorrect entry on the credit or debit side of the ledger respectively, example overcastting the soles account by N350 and also
the rent account by the same figure . Thus both the debit and credit side of the ledger
are inflated by N350 . The error is
corrected by debiting the sales account
by N350 and crediting the
rent account by N350
4.
Error of complete omission or
duplication: an error
of omission occurs when a transactions is
completely omitted form the
debit nor the credit side of the ledger contains details of the transactions. A typical
example is when cash of say N5000
received from Eze when
discovered, the cash book should be debited with N5000 and Ezes account credited with N5000. Duplication
involves repeating the recording of a transaction in the accounting records
with result that both the debit and credit sides of the ledger are entered
twice with the same figures
5.
Error Of
Commission: This is an
error which occurs when a transaction is
entered in a wrong account of the
same class . eg posting a purchases of goods,
N100,000 from Ozi in
error to Oza’s account. This error is corrected by debiting Ozas account with N100,000 to cancel the erroneous entry, and crediting
Ozi’s account to reflect the purchases form him
6.
Complete reversal of entries: this error occurs when an item is
debited to an account where it should
actually be credited, a credited to an
account where it should be debited.
Example, a receipt of cash of N50 from emma is
credited to the cash book and debited to emma’s account. This
error could be corrected by debiting
the cash book with double the
original amount (IE N100) and crediting Emmas account with the same
doubled figure of N100.