Accounting – 3.1 The trial balance | e-Consult
3.1 The trial balance (1 questions)
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Compensating Error: A compensating error occurs when a debit and a credit error of the same monetary amount are made in the accounting records. For example, if £100 is debited instead of credited, and £100 is credited instead of debited, the total debits and total credits remain the same. This results in the trial balance being balanced.
Omission Error: An omission error occurs when a transaction is completely failed to be recorded in the ledger. For example, a £50 sales transaction is never entered. This results in either a debit or a credit difference in the trial balance, leading to an imbalance. The total debits will be less than the total credits (or vice versa), causing the trial balance to be unbalanced.
Effect on Trial Balance:
| Compensating Error: Trial Balance will be balanced. |
| Omission Error: Trial Balance will be unbalanced. |