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Errors in Accounting
The fundamental principle of the double-entry system is that every debit has a corresponding credit of equal amount and vice-versa. Therefore, the total of all debit balances in different accounts must be equal to the total of all credit balances in different accounts, i.e., the total of the two columns should tally (agree).
The tallying of the two totals (debit balances and credit balances) of the trial balance ensures only arithmetic accuracy but not accounting accuracy. If however, the two totals do not tally, it implies that some errors have been committed while recording the transactions in the books of accounts. The following are the various kinds of errors.
Kinds of Errors
Keeping in view the nature of errors, all the errors committed in the accounting process can be classified into two.
1. Errors of Principle
Transactions are recorded as per generally accepted accounting principles. If any of these principles is violated or ignored, errors resulting from such violation are known as errors of principle. For example, Purchase of assets recorded in the purchases book. It is an error of principle, because the purchases book is meant for recording credit purchases of goods meant for resale and not fixed assets. A trial balance will not disclose errors of principle.
2. Clerical Errors
These errors arise because of mistakes committed in the ordinary course of accounting work. These can be further classified into three types as follows.
a) Errors of Omission
b) Errors of Commission
c) Compensating Errors
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