ExpertCorrection of Errors
Learning outcomes
- Identify the types of error which may occur in accounting systems
- Identify errors which would be highlighted by the trial balance and those which would not
- Prepare journal entries to correct errors
- Calculate the impact of errors on the SPL and SFP
Objective A-D: Types of Errors and Correction
Types of Errors
| Error Type | Description | Affects TB? |
|---|---|---|
| Error of omission | Transaction completely left out | No |
| Error of commission | Correct amount, wrong account of same type | No |
| Error of principle | Correct amount, wrong type of account | No |
| Error of original entry | Wrong amount in both debit and credit | No |
| Compensating errors | Two errors cancel each other out | No |
| Error of reversal | Debit and credit entries swapped | No |
| Single-sided entry | Only one side of the entry recorded | Yes |
| Unequal entries | Different amounts debited and credited | Yes |
| Casting error | Incorrect addition of a column | Yes |
Correcting Errors
To correct an error, prepare a journal entry that:
- Reverses the incorrect entry (if one was made)
- Records the correct entry
Or more efficiently, record the net adjustment needed.
Example: A repair of £500 was incorrectly debited to the motor vehicles account (capital expenditure) instead of the repairs expense account.
What was done: Dr Motor Vehicles £500 | Cr Cash £500
What should have been done: Dr Repairs Expense £500 | Cr Cash £500
Correcting entry: Dr Repairs Expense £500 | Cr Motor Vehicles £500
This moves the debit from the wrong account to the right account. The credit to cash was correct and doesn't need changing.
The 'Was Done / Should Be Done' Technique
For every error correction question: (1) Write out what WAS recorded. (2) Write out what SHOULD have been recorded. (3) The correcting entry is the difference between the two. This systematic approach prevents mistakes under exam pressure.
A sale of £750 to Customer A was incorrectly posted to Customer B's account. What type of error is this?
Office stationery costing £200 was debited to the office equipment account. What is the correcting journal entry?
Ready to put this into practice?
Ready to test yourself?
ACCA FA — Financial Accounting Practice Exam 1
A complete mock exam replication for ACCA Financial Accounting (FA). This exam mirrors live computer-based testing parameters, featuring 35 Objective Test Questions (Section A) and 2 Multi-Task Questions broken down into 30 independent sub-questions (Section B). Covers double-entry accounting, ledger adjustments, group consolidations, and financial statement production.