or accountant unintentionally. • In the accounting process, errors may occur at the stage of journalising, posting, balancing or preparing trial balance. • The failure of an accountant to record a transaction or an item in the books of accounts is known as error of omission. It may be complete omission or partial omission.
• Error of principle means the mistake committed in the application of fundamental accounting principles in recording a transaction in the books of accounts. • The errors that make up for each other or neutralise each other are known as compensating errors. • Certain errors are disclosed by the trial balance and certain errors are not disclosed by the trial balance. • When the trial balance does not tally, the amount of difference is placed to a temporary account known as ‘suspense account’.
• Errors can be rectified before preparing the trial balance or while preparing the trial balance or after preparing the trial balance but before preparing the final accounts or after preparing the final accounts. Accountancy Self-examination questions I Multiple choice questions Choose the correct answer . Error of principle arises when (a) There is complete omission of a transaction (b) There is partial omission of a transaction (c) Distinction is not made between capital and revenue items (d) There are wrong postings and wrong castings . Errors not affecting the agreement of trial balance are (a) Errors of principle (b) Errors of overcasting (c) Errors of undercasting (d) Errors of partial omission .
The difference in trial balance is taken to (a) The capital account (b) The trading account (c) The suspense account (d) The profit and loss account . A transaction not recorded at all is known as an error of (a) Principle (b) Complete omission (c) Partial omission (d) Duplication . Wages paid for installation of machinery wrongly debited to wages account is an error of (a) Partial omission (b) Principle (c) Complete omission (d) Duplication . Which of the following errors will not affect the trial balance?
(a) Wrong balancing of an account (b)