1. Errors of omission. These errors are incurred in those cases when a transaction
is completely omitted from the books of accounts. It happen: when a transaction is not recorded in the books of the original entry (i.e., various journals). For example, if a purchase of goods on credit from Shri Ram Lal has not at all been recorded in the books of accounts, such an error will be teimed as an error of omission. Since, there has been neither a debit entry nor a credit entry, therefore, the two sides of the TYial Balance will not be at all affected on account of this error. Such errors, therefore, cannot be located out very easily. They come to the notice of the businessman when statement of accounts are received from or sent to creditors or debtors as the case might be.
2. Errors of commission. Such errors include errors on account of wrong balancing of an account, wrong posting, wrong carry forwards, wrong totalling, etc. For example, if a sum of Ps 50 received from Mukesh is credited to his account as Rs 500, this is an error of commission. Similarly, if the total of the debit side of an account is carded forward from one page to another and the mistake is committed in such carry forward (e.g. total of Rs 996 is carried forwards as Rs 699) such an error is an error of commission. Errors of commission affect the agreement of the Trial Balance and, therefore, their location is easier.
3. Errors of principle. Errors of principle arc committed in those cases where a proper distinction between revenue and capital items is not made. i.e., a capital expenditure is taken as a revenue expenditure or vice-versa. Similarly, a capital receipt may have been taken as 1 revenue receipt or vice- versa. For example, a sale of old furniture of Rs 500 should be credited to the furniture account, but if it is credited to the Sales Account, it will be termed as an error of principle. Sale of old furniture is a capital receipt. If it is credited to Sales Account, it has been taken as a revenue receipt. Such errors by themselves do not affect the agreement of the Trial Balance. Therefore, they also are difficult to be located.
4. Compensating errors. As the name indicates, compensating errors are those errors which compensate each other. For example, if a sale of Rs 500 to Ram is debited as only of Ps 50 to his account, while a sale of Rs 50 to Shyam is debited as of Rs 500 to his account, it is a compensating error. These errors also do not affect the agreement of the ThaI Balance and, therefore, their location is also difficult.
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