📘 Introduction – What Are Errors in Accounting?
In every business, accounts are made by people. And people can make mistakes.
These mistakes in books of accounts are called accounting errors.
Some are made without any intention, and some may be due to carelessness.
👉 An auditor’s job is to find these errors and correct them so that the accounts become correct and reliable.
✅ What Is an Error in Accounting?
An error in accounting means a mistake while writing or posting entries in the books.
These can be:
- Writing wrong amount
- Missing an entry
- Entering twice
- Writing in the wrong place
💡 Example:
You bought goods worth ₹2,000 but forgot to record it in the books – this is an error.
🔍 Types of Accounting Errors
Now let’s look at the 5 main types of accounting errors in a very simple way.
🔹 1. Error of Omission
This happens when a transaction is not recorded at all.
📝 Example:
A sale of ₹1,000 is completely forgotten – not written anywhere.
📌 Effect: That amount is missing from the accounts.
🔹 2. Error of Commission
This happens when the correct amount is written, but it is posted to the wrong person’s account.
📝 Example:
₹500 received from Ramesh is wrongly entered in Suresh’s account.
📌 Effect: Amount is right, but person is wrong.
🔹 3. Error of Principle
This happens when the wrong rule of accounting is used.
📝 Example:
Buying furniture (capital expense) is treated as daily expense.
📌 Effect: Profit may look less or more than actual.
🔹 4. Compensating Error
This means two wrong entries that cancel each other.
📝 Example:
Sales is less by ₹200, and purchases also less by ₹200.
📌 Effect: Trial balance looks okay, but both sides are wrong.
🔹 5. Error of Duplication
This happens when a transaction is entered two times.
📝 Example:
Salary of ₹5,000 is written twice by mistake.
📌 Effect: Expenses become extra, profit looks less.
🔧 How Does an Auditor Find These Errors?
The auditor uses simple steps:
🔍 Checks original bills and vouchers
🔍 Compares entries with last year
🔍 Uses trial balance to spot mismatches
🔍 Asks questions to staff
🔍 Uses sampling to test random entries
💡 Example:
Auditor asks for purchase invoice to match with purchase book entry.
📊 Quick Table – All Errors at a Glance
| 📌 Type | 💬 What It Means | 🧠 Simple Example |
|---|---|---|
| Error of Omission | Entry is missing | Forgot to write rent ₹1,000 |
| Error of Commission | Entry to wrong person | Received from A, but entered in B’s name |
| Error of Principle | Wrong rule used | Treated machine repair as income |
| Compensating Error | Two wrongs cancel each other | Less sales & less purchases |
| Error of Duplication | Entry written twice | Electricity bill ₹500 entered 2 times |
🎯 Conclusion – Errors Look Small but Can Be Big
Even a small mistake can:
- Show wrong profit
- Lead to wrong decisions
- Cause tax problems
That’s why an auditor carefully checks for all types of errors to make sure the accounts are correct and complete.
📝 Tips for Students (Exam Help)
🖊️ Define each error in 1 line
🖊️ Give 1 small example
🖊️ Mention its effect
🖊️ Write how auditor can find it
This is enough to score full marks!