⟩ Explain what are the common errors in accounting? What steps will you follow to locate errors?
Following are the common errors in accounting:
☛ Errors of Omission
☛ Errors of Commission
☛ Errors of Principle
☛ Compensating Error
To locate the errors in the trial balance follow the below steps:
☛ Check the total of all the subsidiary books, cash book and trial balance.
☛ Ensure that all the opening balances have been correctly brought forward in the current year’s books of account.
☛ Ensure that all the ledger accounts have been properly balanced and the balances of all the ledger accounts have been reflected in the Trial Balance.
☛ The difference in trial balance should be halved to locate such errors.
☛ If the difference in the trial balance is divisible by 9 without any reminder, it may indicate the transposition or transplacement of the amounts.
☛ The trial balance of the current year can be compared with the trial balance of the previous year to locate certain highlighting error.
