Significant Errors In Balance Sheets And Its Correction

Type of Errors

a. Double entry is incomplete
This error occurs when there is a lag behind debit records or credit records for a transaction.

b. Transactions are recorded twice on the same side
This error occurred because both accounts were debited or credited.

c. Counting errors in journals are booked into the ledger
The purchase amount is over mixed in the Purchase Journal and this amount is posted to into Purchase Account in the General Ledger

Error Correction After Ending Account Prepared

1. If errors can only be detected after the completion of the Ending Account, the error may affect the gross profit and net profit and Balance Sheet.

2. Any mistakes that occur in the details of the Trading Account will affect the gross profit and thus net. The errors that occur in the items in the Profit Loss Account will affect only net profit.

3. If an error occurs in an Asset Account or an Individual Account, then the error will not affect profits because those accounts are not transferred to the Trading Account or Profit Loss Account.