If you’re in accounting field, then you will be likely making errors time to time. And there is no doubt in that errors generally occur when the work is related to finance, money management, bookkeeping, and accounting. We all know that any error occurred in accounting field can kill the performance of your business and hamper the company’s growth. But most of errors are considered to be fraud, which is wrong. In fact, there are myriad of accounting errors that you need to know. The purpose of this article is to make you aware of numerous accounting errors, you could make.

Without much ado, let’s talk about the different types of accounting errors you can encounter.

At a glance, different types of accounting errors

In the accounting system, the types of accounting errors are classified as:

| Error of omission

An error of omission occurs when the transaction in the accounting book is missed or ignored. Sometimes an accountant forgets to record a transaction and the reason for that could be anything. If you also forget to record any transaction in the accounting books, you will also face this error.

| Subsidiary entries

Subsidiary entry is the error which happens when you record any transition incorrectly. We know that how much tension an error can cause if something happens like that. Well, this type of error is personally detected by proper bank reconciliation.

| Error of principle

In simple words, a transaction which happens due to incorrect usage of accounting principle is known as error of principle. Another term for this type of error is input error. Why? Because correct figure amount of recording is done in the wrong account. Moreover, the errors of principle don’t meet the generally accepted accounting principle (GAAP).

| Errors of commission

The errors of commission generally happen when the amount is entered right (with correct amount), but the value accounted for it is wrong. It means the money is subtracted in lieu of being added or vice versa. Didn’t you get it? Let’s understand this with an example – suppose you have made the payment of electricity bill to telephone account. But let me tell you that both electricity and telephone bills are categorised as expense account.

| Errors of reversal

What does an error of reversal mean? It simply means when an error is debited in lieu of credibility the entry or the vice versa results so this type of errors is called errors of reversal.

| Rounding errors

Next type of accounting error is rounding error. There is no doubt that rounding of a figure will make the accounting inaccurate and no wonder it will make a thread of errors in the future. Let me tell you that this type of error is made by an accounting software or accountant.

| Transposition error

What does transposition error mean? This error occurs when two or more digits are transported or reserved, this error happens in the book. No doubt, this single error can completely disturbs the accounting book or system.

| Error of original entry

Sounds little wired right. But original entry error occurs when a wrong amount of a transaction is entered the book of prime entry. It simply means a sake invoice is inputted in the sales journal.

How to tackle these errors?

Guys, we know that errors are quite daunting and can make the entire accounting books troublesome. But there is no doubt that errors in accounting and business finance can weaken the performance of your business. And to tackle those errors, you need to take help of an accountant or virtual accounting services in New York.

The bottom line

Any kind of error in accounting book is treacherous. An error can cause any business to collapse right. In this article, I have shared different types of accounting errors you can encounter. Now that you have read types of accounting errors, make sure not to commit them. If you’re unaware of accounting or bookkeeping, then never forget to take help of a professional and experienced accountant from a renowned accounting firm like Kayabooks.

If you got any query or question to ask, we’re here just get in touch with us.