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What are the Errors not affecting the Trial Balance?

Learn accounting with us today ➡️ https://www.theaccountingstudent.co.uk WHAT ARE THE ERRORS NOT AFFECTING THE TRIAL BALANCE? The trial balance is a useful method for preparing the financial statements of an entity, it follows the dual aspect concept and also assists in identifying errors made in the double entry records. However the major limitation of the trial balance is that even if the trial balance totals agree or balance with each other. There can still be some errors in the accounts which will not be revealed by the trial balance. There are six main errors that do not affect the trial balance. They are; Error of omission, Error of commission, Error of principle, Compensating error, Error of original entry, Complete reversal of entries. The first error is error of omission. This is where an entry has been entirely left out of the accounting records. For example, the purchase of goods to K.George of £85 has been completely left out of the accounting records of Good LTD. The next error is error of commission. This is where the entry has been recorded in the right type of account but in the wrong account name. For example, the goods bought from J.Thomas for £30 was entered in error in J.Tomas’ account. Error of principle is where the entry has been made in the wrong type of account. For example, a purchase of a motor vehicle was entered in the motor vehicle expenses account rather than the motor vehicles account. The compensating error is where errors made in one part of the accounts exactly cancels out another error made in another place in the accounts and this is very difficult to detect. For example, the wages account is overcast by £50 and the sales account has also been overcast by the same amount. The next error is the error of original entry. This is where the original value from the source documents was calculated incorrectly. For example, a purchase invoice valued at £21 was wrongly entered in the accounts as £12. The last error is the complete reversal of entries error. This is where correct values are entered into the accounts but are posted to the wrong side of the accounts i.e. the account that should be debited is credited and vice versa. For example, a payment to A.Jones of £70 was wrongly debited to the bank account and credited to A.Jones. This video will help you with questions such as what are the errors not affecting the trial balance, limitations of the trial balance, why some errors do not affect the trial balance, how do you correct errors that do not affect the trial balance, errors that do not affect the trial balance, errors that affect the trial balance, 3 errors that do not affect the trial balance, errors that affect the trial balance with examples, 6 errors not revealed by trial balance, what are the 5 errors that affect trial balance. MUSIC CREDIT ‪@benfrydrums‬ DISCLAIMER Our content is to be used as an EDUCATIONAL TOOL that aims to provide a foundation for individuals to learn financial accounting, management accounting and bookkeeping topics as practiced in the United Kingdom. As a result, not all complexities are shown or provided. Examples may include but are not limited to; differences between financial reporting, accounting standards or tax treatments. We are NOT ENGAGED in the providing of accounting, bookkeeping, financial, investment, tax, or other professional services. You should consult with a qualified or professional such as an accountant, business advisor, investment specialist, lawyer, solicitor, etc., with regards to specific facts and situations. #trialbalance #trialbalanceerrors #errorofomission