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Accounting errors and suspense accounts

Nature of accounting errors

Errors where the trial balance Errors where the trial balance
still balances: does not balance:

 error of omission  posting only one part of the
double-entry
 error of commission
 posting a different value of
 error of principle debits and credits

 error of original entry  arithmetic errors

 reversal of entries  opening balance not brought
down correctly
 duplication of entries

 extraction error.
 compensating errors.

In situations where the trial balance does not balance, it is good practice to open a
suspense account and record the amount of the difference from the trial balance in
the suspense account.

The use of a suspense account allows financial statements to be prepared subject to
the correction of errors.

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