Errors of omission

Definition & Explanation

If a transaction is omitted altogether from the books of accounts, there would be neither a debit nor a credit entry in the ledger. Hence the trial balance will not be affected.

Effect on the Accounts

The ledger will have no record of the transaction, as there will be no debit or credit entry in the ledger.

Rectification of Entry

The transaction is recorded through General Journal, in the same manner as it would have been recorded when it originally took place. The reason for delay is given in the narration.

Example

A credit note for $2,750 received from Hattar Wholesalers was misplaced and not recorded in the books. It was discovered two months later on 21 July 2017.