Question

A sale to Chetan was entered as a sale to Ketan. This is an example of ___________.

• A. Error of omission
• B. Error of commission
• C. Compensating error
• D. Error of principle

Answer 1

The correct option is B Error of commission

An accounting error is a non-fraudulent discrepancy in financial documentation. The term is used in financial reporting.

Types of accounting errors include:

• Error of omission -- a transaction that is not recorded. one example of this is - A credit note for $2,750 received from Hattar Wholesalers was misplaced and not recorded in the books. It was discovered two months later on 21 July 2017.
• Error of commission -- a transaction that is calculated incorrectly. One example of thi is - A credit sale of goods for $7,200 to Mr. David was erroneously debited to Mr. John’s account.
• Error of principle -- a transaction that is not in accordance with generally accepted accounting principles ( GAAP). One example of an accounting error of principle is an expenditure that is placed in an inappropriate category.

Therefore, the error in a given question is a type of error of commission.