In accounting there are bound to be errors. Some of these errors can be detected by the trial balance while others can not be detected.
What errors can be detected?
Casting error – Sum has been calculated wrong
What errors can not be detected?
There are certain errors that are not picked up by the trial balance. These include:
Error of omission – When a business has forgotten a transaction completely
Error of commission – When an amount has been put in the wrong persons account
Complete reversal of entries – Debit and credit has been put on the wrong side
Error of principle – When an amount has been entered in the wrong class of account
Error of original entry – Wrong original figure entered into accounts
Error of transition – Digits of amount have been switched around
To solve the errors that are not detected we can use a suspense account
How to use a suspense account?