Believe it or not, people tend to make a lot of errors in accounting field if not knowingly then unknowingly. If you’re one of them working in accounting field and witnessing errors in business financing then you might be making errors. No doubt, a minor error can destroy the business foundation and result in shutting down of it. Sounds horrifying, right. But fret not guys.
Here in this blog, I’m going to walk you through common types of accounting errors that you need to avoid making. So, let’s have a look at them below.
A list of common types of accounting errors, you must avoid making
- No proper record of accounting books
We know that how hectic the task of filling accounting books and files is. People get frustrated and due to which they end up committing errors that leads to error in the future. But now accounting tools and software have been introduced, you can make use of them to avoid this mistake.
- Error of omission
This error means, you’re failed to record an item in the accounting books. Well, this error is not intentional but overlooked or ignored. For instance, you get an invoice but failed to record it. So, this error happens when you misplace documentation or that you never record.
- Data entry error
Data entry error as the name suggests entering data in the wrong accounting file manually. Yes, some of the common data entry errors include:
- Leaving or adding a decimal number
- Treating expenses as income
- Filling items in the wrong accounting books
- Omission or duplicating an entry
- Transposing numbers
These are some common errors that you need to avoid making.
- Error of commission
In error of commission, you mishandle an item by putting it in the wrong place. What exactly happens is that the amount you enter is right but you use the incorrect sub-account.
- Error of duplication
As the term suggests, this error basically means you enter the same item of income or expense more than once. This error generally happens when more than one person has the access to the accounting system and each makes the same entry.
- Error of transposition
So, this error basically means recording the incorrect amount of an item by reversing number. This error happens when you overstate the amount of an item or misunderstand the figure. This results in transposing the number.
Final wordings
Guys, these were the common accounting errors that you just read. These errors can lead to mismanagement of your finance so make sure to avoid making them and keep your business finance healthy.
