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What is the difference between an error of omission and an error of commission ?

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Question added by Nadjib RABAHI , Freelancer , My own account
Date Posted: 2016/04/24
Abdul Khalique
by Abdul Khalique , Finance Manager , Value Real Estate & Construction

Errors of Omission: The errors committed by not recording a transaction either in the book of original entry or in the ledger book are errors of omission. Such an omission may be either wholly (complete) or partially. Complete omission takes place if a transaction is not recorded in the journal at all. for example, goods sold to John for $ 10,000 were not recorded in the sales book at all. A complete omission of transaction may occur due to many reasons such as sales invoice misplaced or lost. Partial omission occurs if a financial transaction is recorded only partially. For example, partial error of omission occurs if goods sold to John for $ 4000 is recorded in sales book but failed to be posted in John's account.

 

Errors of Commission:  When a transaction has been miss-recorded either wholly or partially it is called as an error of commission. Error of commission can happen in the following ways: Errors in posting, Errors in Casting, Errors in carrying forward, Errors occurring during extraction of balances, etc. Posting errors may be of a wrong account, wrong amount or wrong file.  For example, amount received from Mr X and credited to Mr Y, purchase of $ 360 from Mr A posted in his account at $ 630 or sales returns from Mr X posted as the debit of his account, etc. The first type of errors will not affect the trial balance, however, the other two will affect the agreement of trial balance. Casting errors are the errors committed while making the totals. This error affects the trial balance. Error of carry forward and errors of extraction of balances also affect the trial balance. Error of duplication is another type of error of commission which means recording the same transaction twice. Such errors however, do not affect the trial balance but they will affect the Profit and Loss A/c (over statement of expenditure).

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