What are the errors in recording business transaction?
1. Single entry error
- Concept of duality must be applied to every transaction
- Worksheet will not balance if only one part of transaction is entered
2. Transposition error
- Occurs when 2 of the digits are transposed
- e.g. Payment of $5340 cash is recorded as $5430 decrease in profit – difference of $90
- A transposition error is always divisible by 9
3. Incorrect entry
- Recording 2 increases or 2 decreases on one side
or
- Recording an increase to one side and a decrease to the other side
- e.g. Owner withdraws cash of $4000 and records the transaction as an increase in cash and a decrease in equity. Asset side will be $8000 higher than claims side
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