Page 110 - Account 10

8. Accounting Errors and Trial Balance
There may be some intentional or unintentional i.e. knowing or unknowing mistakes
committed by the accountant or other accounting staff in the process of maintaining books
of account. The mistakes, which may take place in the process of maintaining books of
account, are known as book-keeping errors or accounting errors.
When the two sides of a trial balance agree (become equal), it indicates the arithmetical
accuracy of the books of account of a business concerned. But, the agreement of trial
balance doesn’t necessarily mean the accounting records are free from every error because
there might be still some errors, which cannot be revealed/disclosed by a trial balance.
Therefore, a trial balance should not be regarded as a conclusive proof of the accuracy of
the books of account. In this way, there are two types of errors which are given below.
A. Errors Disclosed by a Trial Balance
When the two sides of a trial balance fail to agree i.e. are not equal, the books of
account are not regarded as arithmetically accurate. The debit and credit totals of a trial
balance do not agree because of some errors and the disagreement of the two totals of a
trial balance locates the arithmetical errors. Thus, the following errors can be disclosed by
a trial balance by means of the disagreement of the two totals.
i. Wrong totalling of Subsidiary Books
ii. Errors of posting on the wrong side of a ledger
iii. Over/under casting an amount while posting into ledger
iv. Errors of double posting on one side of a ledger
v. Errors of omission of posting on one side of a ledger
vi. Errors of totalling and balancing of accounts in the ledger
vii. Omission of any ledger A/c in the trial balance
viii. Errors of mentioning the balance of any ledger in the wrong side of trial balance
ix. Errors in the totalling of the trial balance itself

B. Errors Not Disclosed by a Trial Balance
The objective of preparing a trial balance is to check the arithmetical accuracy of the
books of account. When both sides of a trial balance are equal, we assume that there are
no mistakes in the books of account. The agreement of a trial balance proves the accuracy
of the books of account. However, it should not be taken as the conclusive proof of the
entire accuracy because there are still some certain errors, which remain unaffected by
the agreement in trial balance. These errors are known as errors, not revealed by the trial
balance. They are given below:
i. Errors of Omission
If a transaction is not recorded in the book of original entry, both the debit and credit
aspects of the transaction will be omitted. This error will not affect the trial balance. For
example, if goods sold to Dahal Bros, of Rs. 1,000 is not recorded in the books at all i.e.
neither debited in Dahal Bros. A/c nor credited in sales A/c, it will not affect the totals of
the trial balance. It is because there’s omission of Rs. 1,000 on both sides. Thus, this type
of error cannot be disclosed by a trial balance.

Key Point The error which occurs due to not recording of transaction in primary
books i.e. journal or subsidiary book is called error of complete omission.

110 Aakar’s Office Practice and Accountancy - 10 Trial Balance 111