Difference Between Errors of Commission and Errors of Omission
Errors of commission are common in accounting and business, where a transaction is recorded with incorrect details—like the wrong amount or in the wrong account. Understanding errors of commission is essential for Commerce students preparing for school board exams, competitive tests, and for clear business practice. This concept helps you distinguish different accounting errors and how to rectify them.
| Type of Error | Nature | Examples | Effect on Trial Balance |
|---|---|---|---|
| Errors of Commission | Wrong entry or misposting | Posting to wrong account, recording incorrect amount | May or may not affect trial balance |
| Errors of Omission | Transaction not recorded | Leaving out an entry completely | Trial balance usually agrees |
| Errors of Principle | Breach of accounting principle | Capital expense recorded as revenue | No effect if equal debit and credit |
What Are Errors of Commission?
Errors of commission are accounting mistakes where a transaction is posted to the wrong account, incorrect side (debit/credit), or with the wrong amount. These errors commonly occur during ledger posting or while transferring balances, and can affect the accuracy of financial records.
Examples of Errors of Commission
- Recording Rs. 3,000 received from Mohan in Sohan's account by mistake.
- Posting the correct amount but to the wrong side (credit instead of debit).
- Recording a sale of Rs. 2,500 as Rs. 5,200 due to a number reversal.
- Entering payment to supplier A under supplier B's account.
- Transferring total from subsidiary book to wrong ledger account.
Errors of Commission vs Errors of Omission
| Basis | Errors of Commission | Errors of Omission |
|---|---|---|
| Meaning | Wrong record/posting of transaction | Complete/partial missing of transactions |
| Effect on Trial Balance | May or may not mismatch | Generally no effect if both aspects omitted |
| Detection | Usually found during ledger comparison | Detected by cross-checking documents |
| Rectification | Journal entry needed | Entry of missing transaction required |
Impact of Errors of Commission on Trial Balance
Errors of commission can either disturb or preserve the trial balance, depending on the type of mistake. If an amount is posted to the wrong side or with the wrong value, trial balance may not agree. However, if a correct amount is posted to the wrong account but on the right side, trial balance will still tally, even though individual accounts are incorrect. This highlights the importance of checking not just the trial balance but also individual ledger accounts for accuracy. Learn more about its effect at Trial Balance.
Rectification of Errors of Commission
Steps for Rectifying Errors of Commission
- Identify the incorrect entry or account posting.
- Reverse the incorrect entry with an opposite entry.
- Post the correct entry in the appropriate account.
- Verify changes are reflected in the affected ledger accounts.
- Check whether the trial balance agrees after rectification.
For a detailed process, refer to Rectification of Errors on Vedantu.
Common Real-World Examples
- Cash received from customer A is posted to customer B’s account by mistake.
- A purchase of Rs. 1,000 is entered as Rs. 10,000 in the purchase book.
- Salary expense debited to wages account instead of salary account.
These types of bookkeeping errors can happen in manual as well as computerized accounting environments. Identifying and rectifying such errors is a common exam question for Commerce students, and vital for business accuracy. For more on account posting, see Ledger Accounts.
Practice Questions on Errors of Commission
- Identify the error: Rs. 2,500 paid to Amit wrongly debited to Amit's account instead of Anil's account. How should it be rectified?
- A credit sale of Rs. 5,000 to Sita is posted to Rita's account. State the type of error and its trial balance effect.
- Journalize the rectification if Rs. 1,200 received from Rohan is posted to his account as Rs. 2,100.
Why Understanding Errors of Commission is Important
Knowledge of errors of commission helps students score better in exams by accurately identifying and correcting mistakes. It also trains future professionals in reliable accounting practices, which are crucial for daily business decisions and maintaining trust in financial statements. For a complete overview of error types, refer to Types of Errors.
At Vedantu, our aim is to provide simple explanations and practical examples so that Commerce topics like errors of commission become easy for every learner. Use this knowledge for exams, business accounting, and accurate financial reporting.
In summary, errors of commission involve wrong postings, incorrect amounts, or misplaced entries in accounting records. Recognizing these errors, understanding their effects, and knowing rectification methods are essential skills for school and exams. With practice and careful review, you can master this topic and ensure error-free business accounts.
FAQs on Errors of Commission: Meaning, Examples & How to Fix
1. What is an error of commission in accounting?
In accounting, an error of commission is a mistake where a transaction is recorded incorrectly. This could involve posting to the wrong account or entering the wrong amount. Understanding errors of commission is crucial for accurate bookkeeping and preparing a correct trial balance.
2. Give two common examples of errors of commission.
Errors of commission frequently occur in accounting. Here are two common examples:
- Incorrect Account Posting: Recording a transaction in the wrong account (e.g., debiting Rent Expense to Salaries Expense).
- Wrong Amount Entry: Entering an incorrect amount for a transaction (e.g., recording a purchase of ₹1000 as ₹100).
3. How do errors of commission differ from errors of omission?
Errors of commission and errors of omission are both accounting mistakes but differ significantly. Errors of commission involve recording a transaction incorrectly, while errors of omission involve completely failing to record a transaction. The impact on the trial balance also varies.
4. Do errors of commission affect the trial balance?
Errors of commission can affect the trial balance, but not always. If the error involves incorrect posting but the correct accounts are used, the trial balance may still balance. For example, if you debit and credit the correct accounts but input the wrong amount, the trial balance may still balance. However, other types of errors of commission may cause an imbalance in the trial balance, highlighting the need for careful bookkeeping.
5. How are errors of commission rectified?
Rectifying errors of commission requires careful analysis. The specific steps depend on the nature of the error. Generally, this involves making the necessary correcting entries to reverse the incorrect entry and then making the correct entry. This process is essential for maintaining the accuracy of financial records and ensuring correct trial balances. Always refer to rectification of errors guidelines for detailed procedures.
6. What is the impact of errors of commission on subsidiary books?
Errors of commission can also affect subsidiary books, such as the accounts receivable or accounts payable ledgers. Incorrect postings in the main ledger will also be reflected in these subsidiary books, leading to discrepancies unless identified and corrected. Accurate maintenance of subsidiary ledgers is crucial in avoiding compounding errors.
7. Are errors of commission more common in manual or computerized accounting systems?
While computerized systems reduce the likelihood of some errors of commission through automated checks and balances, they are still possible. Data entry mistakes or incorrect programming can lead to similar errors. Manual systems are generally more prone to these types of errors due to human intervention in recording transactions.
8. Why doesn’t every error of commission affect the agreement of trial balance?
Not every error of commission affects the trial balance agreement because some errors may offset each other. For example, if you debit one account and credit another, with the wrong amounts but the wrong amounts are the same, your trial balance will still balance. However, this doesn't mean the financial records are correct; only that the error hasn't revealed itself as an imbalance in the trial balance.
9. What are the 4 types of errors in accounting?
Accounting errors are broadly classified into four types: errors of omission (entire transaction missing), errors of commission (incorrect entry), errors of principle (violation of accounting principles), and compensating errors (errors cancelling each other). Understanding these categories helps identify and rectify accounting discrepancies.
10. What are the errors of commission in pharmacy?
In pharmacy, errors of commission can have serious consequences. They involve dispensing the wrong medication, the wrong dosage, or providing incorrect instructions. Such errors emphasize the critical need for accuracy and attention to detail in pharmaceutical practices. These errors are often categorized under dispensing errors or medication errors.
11. Can errors of commission go undetected during routine audits?
Yes, some errors of commission can go undetected during routine audits. Sophisticated audit techniques are necessary for uncovering these mistakes. The probability of detection depends on the type of error, the size of the error, and the effectiveness of the audit procedures employed. Auditors use various techniques, including analytical review, sampling, and substantive testing, to mitigate this risk.
12. How can automation help minimize errors of commission?
Automation significantly minimizes errors of commission. Software applications with built-in validation checks, automated posting features, and data entry safeguards substantially reduce human error. However, it is crucial to note that automation doesn't eliminate the need for human oversight and regular reconciliation of accounts.
