Question

If the amount is posted in the wrong account or it is written on the wrong side of the account, it is called _________.

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

Answer 1

Answer: (B)

Error of commission

Option B is correct.

Error of commission - A mistake that consists of doing something wrong, such as including a wrong amount, or including an amount in the wrong place.

Error of omission - An error of omission happens when you forget to enter a transaction in the books. You may forget to enter an invoice you’ve paid or the sale of a service.

Error of principle - A transaction that incorrectly uses an accounting principle is called an error of principle.

A compensating error is an accounting error that offsets another accounting error. These errors can be difficult to spot when they occur within the same account and in the same reporting period, since the net effect is zero.