Question

Select the most appropriate alternatives from those given below and rewrite the sentence.

Errors occurred due to wrong posting are called errors of ________.
a) compensating
b) omission
c) principle
d) commission

Answer 1

Errors occurred due to wrong posting are called errors of commission.

Explanation:
Errors occurred due to wrong posting are termed as errors of commission. These are two-sided errors, hence do not affect the agreement of the Trial Balance. The following acts give rise to errors of commission.

1. When posting is made in wrong account and with the wrong amounts.
2. When posting is made with wrong amounts but in correct accounts.
3. When posting is made in wrong accounts but with correct amounts

However, on the other hand, errors of omission occur when a transaction is not recorded in the books of accounts. Lastly, the compensating errors are said to occur when the effect of one error is compensated or nullified by the effect of another error.