Avoid These Common Accounting Errors – Pt. 1
Accounting errors happen to the best of us, but if you can learn to detect and correct these errors, you can avoid costly mistakes. Not all accounting errors can be found in the trial balance either. Here are a few hours you may come across.
Omission – If you are not diligent about recording transactions as they happen, you may accidentally omit one from your books. This can be hard to detect because your trial balance won’t look off. The best way to prevent this type of error is to create a standardized process for entering transactions promptly.
Reversal – When a transaction that was meant to be entered as a debit is entered as credit, this is a reversal error. The trial balance will still be balanced, so be sure each transaction is double-checked as it is entered.
Principle –Principle errors involve incorrectly applying an accounting principle. For example, you expensed an asset that should have been recorded as an asset. These items are both recorded in the books as debits, so it’s a technical error. It pays to double check your debits before inputting them in case you ever need to break down your debits into types.
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