Error of omission
What is an error of omission?
An error of omission is a transaction left out of the books completely.
There is no debit and no credit, so both totals of the trial balance are too low by the same amount. The trial balance still agrees.
It is corrected by making the entry that was missed.
Example
A supplier's invoice for £380.00 of paint is never entered. Ignore VAT. The correction is the entry that was missed: debit Purchases with £380.00 and credit Trade payables with £380.00.
Why it matters
The trial balance will not find it. Other checks will: a supplier's statement that shows the invoice, or a gap in the invoice numbers.
Practise it
Module, 5 rooms, PremiumErrors the trial balance hides
See the first roomA transaction left out of the books
Ledger Drill is practice, not tax or accounting advice. If this looks wrong, tell us at [email protected].