ERRORS IN THE ACCOUNTING PROCESS

An inequality of debits and credits would automatically signal the presence of an error.  Some possible errors that would cause the inequality of the trial balance are:

1. Failing to post part of a journal entries.

2. Posting a debit as a credit, vice versa.

3. Incorrectly determining the balance of accounts.

4. Recording the balance of an account incorrectly in the trial balance.

5. Omitting an account from the trial balance.

6. Incorrectly determining the totals of the two columns of the trial balance.

7. Listing a debit balance of an account in the credit column.

There are several errors committed during the recording the recording process that will not affect the equality of the trial balance. Examples are:

1. Not recording a complete transaction.

2. An erroneous amount is recorded for both debit and credit.

3. A transaction may be recorded twice.

4. A transaction may be recorded correctly but posting a part of the entry to a wrong account.

To locate an error, a bookkeeper normally works backward through the steps in the accounting process starting from:

1. Re-adding the trial balance columns.

2. Compare the trial balance with the balances per account.

3. Verify the balance of each account by re-footing.

4. Verify posting to the ledger.

5. Verify journal entries.

6. Review the transactions, if necessary.

 Reference:

Fundamentals of Accounting P-1 (Accounting for service, Merchandising and Manufacturing)

By: Gloria Ardaniel Rante