Trial Balance & Errors

Trial Balance & Errors

1. TRIAL BALANCE:

   • 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.

2. Error of Commission:

   • Occurs when one or both double entries are made in the correct classification of account but entered under the wrong name.
     • For Example: £100 - P.Smith instead of £100 - B.Smith

3. Error of Omission:

   • Occurs when both double entries for a transaction have been left out from the book of accounts.
     • Transaction has not been records anywhere.

4. Error of Principle:

   • Occurs when one or both of the double entries are made in the wrong classification of account.

5. Compensating Error:

   • Where two or more opposing errors act to cancel each other out.

6. Error of Original Entry:

   • Where the double entry for a transaction have been recorded under the correct name but with the wrong amount.

7. Error of Reversal:

   • The entries have been made on the wrong side of accounts.
     • has been put in the correct account but has been recorded as a debit instead of a credit.