This error can take several forms. Some examples are given below:
- A transaction may be entered in the subsidiary book at a wrong amount (error in original entry) and later debited or credited to a wrong account in ledger (error of commission).
- A capital expenditure may be treated as a revenue expenditure and at the same time the entries may be made in the ledger on the wrong sides of accounts involved (complete reversal of entries).
The above errors (and other errors like these) should be treated as ‘two errors’ and two separate rectification entries should be passed to rectify them.
An invoice for $1,450 issued to Mr. Tom was entered at $1,400 in sales book and later debited to Tom & Company’s account. (These are obviously two errors. First there is an error in original entry when an invoice for $1,450 is recorded in the sales book at $1,400 and the second when Tom and Company account is debited instead of Mr. Tom Account.)
Note: (As a result of the above two entries, total credit in the Sales Account is increased from $1,400 to $1,450 (the correct amount of the invoice). At the same time, the debit entry of $1,400 is removed from Tom & Company Account while Mr. Tom’s Account is debited with a total of $1,450 which is the correct amount of the invoice.)