Give one word/term on phrase for each of the following statements.
1) Errors of incorrect entries or wrong posting.
2) Account to which difference in trial balance is transferred.
3) Errors which are committed by clerks.
4) Transaction remained to be recorded at all in the books of accounts.
5) Error in which the effect of one mistake is nullified by another mistake.
6) An entry passed to cancel wrong effects given and give correct effects to accounts affected.
7) Errors of calculation.
8) Error which affects the agreement of trial balance.
9) Error which are not disclosed by the trial balance.
10) Taking the Total more while closing books of accounts
Give one word/term on phrase for each of the following statements.
1) Errors of incorrect entries or wrong posting.
2) Account to which difference in trial balance is transferred.
3) Errors which are committed by clerks.
4) Transaction remained to be recorded at all in the books of accounts.
5) Error in which the effect of one mistake is nullified by another mistake.
6) An entry passed to cancel wrong effects given and give correct effects to accounts affected.
7) Errors of calculation.
8) Error which affects the agreement of trial balance.
9) Error which are not disclosed by the trial balance.
10) Taking the Total more while closing books of accounts
1. Errors of incorrect entries or wrong posting- Error of Commission
Explanation:
An error of commission is related to a wrong recording or posting of amount in the same account or different accounts, wrong totaling etc. Thus, all the errors related to recording or posting of incorrect entries are termed as errors of commission. It is also known as two-sided error, i.e. this type of error does not affect the Trial Balance. For example, goods worth Rs 5,600 sold to X were recorded in Journal as Rs 6,500 and also posted as Rs 6,500. Hence, it is termed as an error of commission and will not affect the agreement of the Trial Balance.
2. Account to which difference in trial balance is transferred- Suspense Account
Explanation:
When the totals of the debit and credit balances of the Trial Balance do not match, then the difference is transferred to a temporary account known as Suspense A/c. This account is opened in order to avoid a delay in the preparation of financial statements. A Suspense A/c is used to rectify the one-sided or single-sided errors.
3. Errors which are committed by clerks- Clerical errors
Explanation:
Errors that are committed by clerks are known as clerical errors. These errors arise due to mistakes committed in the ordinary course of accounting work. Thus, the posting of wrong amount, posting to the wrong side, errors of omission, etc. are some of the examples of clerical errors.
4. Transaction remained to be unrecorded at all in the books of accounts- Error of Omission
Explanation:
When a transaction is altogether omitted from being recorded in the books of accounts, then it will be termed as an error of omission. Such an error will not affect the agreement of the Trial Balance, as the transaction has not been recorded in the books of accounts.
5. Error in which the effect of one mistake is nullified by another mistake- Compensating errors
Explanation:
Compensating errors are the errors in which the effect of one error is nullified or compensated by another error. For example, if X’s A/c is debited with Rs 50 instead of Rs 500 and Rs 500 is recorded on the debit side of Y’s A/c instead of Rs 50, then it is termed as a compensating error, as the effect of one error is compensated or nullified by the effect of another error.
6. An entry passed to cancel wrong effects given and give correct effects to accounts affected-Rectification entries
Explanation:
Those entries that are passed to cancel the incorrect effects of a given entry and to give the correct effect to accounts affected are known as rectification entries. Rectification entries are passed to rectify the errors committed at the time of recording or posting entries.
7. Errors of calculation- Arithmetical errors
Explanation:
Errors related to wrong calculations are known as arithmetical errors. These errors affect the agreement of the Trial Balance. For example, wrong casting and errors of totaling are related to arithmetical errors.
8. Error which affects the agreement of trial balance- One sided errors
Explanation:
Errors that affect the agreement of the Trial Balance are termed as one-sided errors or single-sided errors. In other words, those errors which affect only one account, such as partial omission, wrong posting in one account and error of casting, are termed as one-sided errors. They will affect the agreement of the Trial Balance. For example, a sum of Rs 2,500 given to Ajay is correctly recorded in the Cash Book but omitted to be posted on the debit side of Ajay’s Account, the error is known as one-sided error because the error exists in the Ajay’s Account only and thus, it affects the agreement of the Trial Balance.
9. Error which are not disclosed by the trial balance- Two sided errors
Explanation:
Errors that are not disclosed by the Trial Balance are known as two-sided errors, as these errors do not affect the agreement of the Trial Balance. These errors simultaneously affect two accounts. Following are the examples of two-sided errors:
1. Error of complete omission
2. Recording of wrong amount
3. Error of principle
4. Compensating errors
10. Taking the Total more while closing books of accounts- Overcasting
Explanation:
Casting means adding the total amount of ledger accounts. Overcasting means overestimating the total of the ledger accounts while closing the books of accounts. Such errors are known as errors of casting. For example, the total of the Purchases Book has been added more by Rs 1,000.
1. Errors of incorrect entries or wrong posting- Error of Commission
Explanation:
An error of commission is related to a wrong recording or posting of amount in the same account or different accounts, wrong totaling etc. Thus, all the errors related to recording or posting of incorrect entries are termed as errors of commission. It is also known as two-sided error, i.e. this type of error does not affect the Trial Balance. For example, goods worth Rs 5,600 sold to X were recorded in Journal as Rs 6,500 and also posted as Rs 6,500. Hence, it is termed as an error of commission and will not affect the agreement of the Trial Balance.
2. Account to which difference in trial balance is transferred- Suspense Account
Explanation:
When the totals of the debit and credit balances of the Trial Balance do not match, then the difference is transferred to a temporary account known as Suspense A/c. This account is opened in order to avoid a delay in the preparation of financial statements. A Suspense A/c is used to rectify the one-sided or single-sided errors.
3. Errors which are committed by clerks- Clerical errors
Explanation:
Errors that are committed by clerks are known as clerical errors. These errors arise due to mistakes committed in the ordinary course of accounting work. Thus, the posting of wrong amount, posting to the wrong side, errors of omission, etc. are some of the examples of clerical errors.
4. Transaction remained to be unrecorded at all in the books of accounts- Error of Omission
Explanation:
When a transaction is altogether omitted from being recorded in the books of accounts, then it will be termed as an error of omission. Such an error will not affect the agreement of the Trial Balance, as the transaction has not been recorded in the books of accounts.
5. Error in which the effect of one mistake is nullified by another mistake- Compensating errors
Explanation:
Compensating errors are the errors in which the effect of one error is nullified or compensated by another error. For example, if X’s A/c is debited with Rs 50 instead of Rs 500 and Rs 500 is recorded on the debit side of Y’s A/c instead of Rs 50, then it is termed as a compensating error, as the effect of one error is compensated or nullified by the effect of another error.
6. An entry passed to cancel wrong effects given and give correct effects to accounts affected-Rectification entries
Explanation:
Those entries that are passed to cancel the incorrect effects of a given entry and to give the correct effect to accounts affected are known as rectification entries. Rectification entries are passed to rectify the errors committed at the time of recording or posting entries.
7. Errors of calculation- Arithmetical errors
Explanation:
Errors related to wrong calculations are known as arithmetical errors. These errors affect the agreement of the Trial Balance. For example, wrong casting and errors of totaling are related to arithmetical errors.
8. Error which affects the agreement of trial balance- One sided errors
Explanation:
Errors that affect the agreement of the Trial Balance are termed as one-sided errors or single-sided errors. In other words, those errors which affect only one account, such as partial omission, wrong posting in one account and error of casting, are termed as one-sided errors. They will affect the agreement of the Trial Balance. For example, a sum of Rs 2,500 given to Ajay is correctly recorded in the Cash Book but omitted to be posted on the debit side of Ajay’s Account, the error is known as one-sided error because the error exists in the Ajay’s Account only and thus, it affects the agreement of the Trial Balance.
9. Error which are not disclosed by the trial balance- Two sided errors
Explanation:
Errors that are not disclosed by the Trial Balance are known as two-sided errors, as these errors do not affect the agreement of the Trial Balance. These errors simultaneously affect two accounts. Following are the examples of two-sided errors:
1. Error of complete omission
2. Recording of wrong amount
3. Error of principle
4. Compensating errors
10. Taking the Total more while closing books of accounts- Overcasting
Explanation:
Casting means adding the total amount of ledger accounts. Overcasting means overestimating the total of the ledger accounts while closing the books of accounts. Such errors are known as errors of casting. For example, the total of the Purchases Book has been added more by Rs 1,000.
