The Most Common Types of Accounting Errors and How You Can Avoid Them


With a deluge of transactions occurring regularly in business, an error is going to occur. Knowing how to detect these errors will help you keep your business’ books tidy and mitigate some serious headaches.

The right product or service will auto-import transactions, or at least help you to better automate your reporting. Couple that with a great accountant, and you’ll be in a much better position to prevent and correct any accounting errors.

Below are the most common type of accounting errors, and how you can fix them.


A reversal error occurs when a transaction is marked as a credit instead of a debit, or vice versa. You won’t catch this in your trial balance because the trial balance verifies that the credits equal the debits on the chart of accounts. Having a system that visually alerts you to the transaction type, e.g. green for credits and red for debits, will help you catch errors when manually entering transactions.


An error of principle is when the bookkeeper applies the wrong accounting principle; e.g. expensing an asset that should be recorded as an asset. This is a technical error; one a good bookkeeper can help to spot.


A commission error occurs when the bookkeeper enters the transaction as the correct class, but in the wrong subsidiary ledger. He or she might record a client payment, but tag it to the wrong invoice. Your trial balance will be correct, but the amount the individual customer owes will not.


One obvious error is completely forgetting (or purposely failing) to include a transaction. However when you’ve completely left something off the books, it can be hard to tell what exactly you’ve omitted, especially if you have hundreds or thousands of transactions. If a transaction is omitted it’s usually because the paperwork is missing, making the transaction harder to locate, so accurate record keeping is important.

Subsidiary entry

Entering the wrong amount for a transaction is an error of subsidiary entry. If you enter a payment of $100 instead of $1,000, you may not catch it because your trial balance will show as correct. To avoid these errors, it’s important to conduct accounting reconciliations. You’d find the error when you do a bank reconciliation and realize the missing $900 is not in your account.

These errors are bound to happen from time to time; when you’re handling tons of transactions for your business errors will occur. Still, the easiest way to handle these problems to avoid them in the first place. Create process making it easy for staff and accountants to enter and track information in your software.

Processes are also important for correcting any errors before seriously impacting your business projections. Regular reconciliations, like bank reconciliations at month-end and fixed asset reconciliations at year-end, will help you spot any entry errors.

A trusted bookkeeper can help your business establish processes, manage transactions and reconcile accounts. If you’re looking for a bookkeeper to help you manage your company’s finances, contact our team at Patin and Associates.