A trial balance tests only that debits equal credits. Six kinds of error keep the totals equal, so they stay hidden until someone checks the accounts themselves.
This lesson is part of the trial balance guide. It follows finding errors that disturb agreement, which covers the errors that do show up.
What are the six errors?
| Error | What happens | Worked example |
|---|---|---|
| Omission | A transaction is left out completely | A credit sale of RM300 is never recorded |
| Commission | Posted to the wrong account of the same type | RM80 electricity bill posted to the water expense |
| Principle | Posted to the wrong type of account | RM2 500 computer debited to Purchases |
| Original entry | The wrong amount is used on both sides | Invoice for RM1 200 recorded as RM1 020 |
| Compensating | Two errors cancel each other out | Sales and purchases both overadded by RM100 |
| Reversal | The debit and credit sides are swapped | Cash received from a debtor is debited to Debtors and credited to Bank |
Worked example: a reversed entry
Ong Stationery paid a creditor RM500 by cheque. The bookkeeper recorded it as Debit Bank 500, Credit Creditors 500. The trial balance still agrees.
- The correct entry should be Debit Creditors 500, Credit Bank 500.
- The wrong entry increased the bank balance by 500 and the creditor balance by 500, instead of reducing both.
- To undo the wrong entry and post the right one, the correcting entry uses double the amount: Debit Creditors 1 000, Credit Bank 1 000.
Check the creditor account. It was wrongly credited 500 and should have been debited 500, so it is out by 1 000 in total. Debiting 1 000 sets it right.
The mistake that costs marks
A common slip is to correct a reversal with an entry for the original amount only. Debit and credit are equal, so the answer looks tidy.
| Correction | Creditors effect | Correct? |
|---|---|---|
| Debit Creditors 500, Credit Bank 500 | Cancels the wrong credit only | No, the payment is still unrecorded |
| Debit Creditors 1 000, Credit Bank 1 000 | Cancels it and records the payment | Yes |
Halving the correction leaves the books half wrong, which loses marks.
Check yourself
RM600 rent was paid by cheque, but the bookkeeper debited Insurance and credited Bank. Name the error and write the correcting entry.
Answer
Both rent and insurance are expenses, so this is an error of commission.
Correcting entry: Debit Rent 600, Credit Insurance 600. The Bank account is correct, so it is not touched.
What to study next
When the trial balance does not agree and you cannot find the error yet, using a suspense account holds the difference temporarily. Then use the trial balance practice set.
The debit-credit transaction trainer is useful for writing correcting entries. A teacher can go through them with you in online one-to-one Accounting tuition.