This is Ravi Verma, In this article, I will tell you about the common error of accounting
There are four types of errors in accounting?
- Errors of Omission:- When we forget to write any transaction in our company account due to which our balance does not match, then we call this error an error of omission.
- Errors of Commission:- When we received an amount and this amount was entered in the journal entries, 100 rupees were debited and credited on both sides but its actual amount is 1000 rupees, due to this error our books of account would have been matched with the wrong amount. Therefore, this type of error is called an error of commission.
- Errors of Principle:-If the error Principle if we are not following our account principle if we buy machinery worth Rs.100,000 from Ram and by mistake, we enter this transaction in the wrong name, then after doing this wrong transaction our If the ledger is completely wrong but the amount of the transaction is same, then this type of error is called error of principle. Example:- If we purchase goods rs 50000 and I have entered this transaction into our journal entry is purchase account Dr 500000, To Cash account 50000 but the correct entry of this transaction is machinery account Dr 50000, To Cash account 50000, Then this type of mistake is called Error of principle.
- Compensation Error:- Such error which we can show by correcting our transaction, then we call this type of error as Compensation Error. Example:- We deposit Rs 10 in Ram’s account and Rs 20 in Shyam’s account, but the correct transaction is Rs 20 in Ram’s account and Rs 10 in Shyam’s account, so the company manages this type of error.