Difference between Error of Omission and Error of Commission

Error of Omission and Error of Commission

Even though accountants put in their best effort to record transactions in a business’s books, errors are bound to occur. This is especially true for businesses having a large number of day-to-day transactions. Accounting errors, if left unattended, can distort the financial position of a business. Therefore, it is very important that these errors be identified by the accountant and rectified as soon as they are found.

Errors may occur because of many reasons such as mathematical mistakes, unintentional mistakes in applying accounting policies, wrong interpretation of facts, or skipping of details. Further, these errors can take place at any stage of the accounting process be it recording in Journal, posting entries to ledger, balancing of ledger accounts, at the time of preparing the trial balance, etc. For ease of understanding, errors can be categorized into two broad types: Errors of principle and Clerical errors.

Error of Omission and Error of Commission

Errors of Principle:

An error of principle is when a transaction is recorded in accounts in contravention of accounting principles. For example, when a revenue expenditure is recorded as capital expenditure and vice versa. Suppose on purchase of a computer (i.e., fixed asset), office expenses account is debited instead of the fixed asset account.

Errors of principle do not affect the agreement of trial balance because the amount gets recorded on the correct side (debit/credit), though in a wrong account.  

Clerical errors:

Clerical errors arise on account of unintentional mistakes made by accountants in the ordinary course of their work. Clerical errors may be sub-divided into three parts:

1. Error of Omission:

When a transaction is either completely or partially omitted from the books of account, it is referred to as an error of omission. This means that either a transaction has not been recorded at all or only a part of it is recorded. To take an example, assume a credit purchase of furniture is not recorded altogether (complete omission) or an entry of credit sales of goods is not posted into the ledger from the journal book (partial omission).

2. Error of Commission:

Errors of commission arise on account of inaccurate recording. Here, although a transaction has not been omitted from being recorded, it is recorded in an incorrect manner. For example, posting an amount in a wrong account, posting an amount on the wrong side of the correct account, wrong totaling or balancing of an account, etc. will all give rise to errors of commission. 

3. Compensating Errors:

Compensating errors are those when the effect of an error made in the books gets canceled out owing to another error made therein. In other words, when two or more errors nullify the effect of each other, they are known as compensating errors. In such cases, the trial balance agrees. Nevertheless, it is important to rectify them as the agreement of trial balance does not signify that all entries are correctly recorded.

Suppose an amount of $100 received from a customer is not credited to his account and at the same time, the total of the sales book (subsidiary book) is $100 in excess. Now, the omission of credit to the Customer’s Account shall be made up by the excess credit to the Sales Account (sundries).

Some instances of distinction between Error of Omission and Error of Commission

In the below paragraphs, you may find some of the main instances of differences between all types of errors including Error of Omission and Error of Commission:

Nature of errorInstancesEffect on Trial Balance
Error of Principle– Treating a revenue expense as a capital expense – Treating a capital expense as a revenue expense – Treating sale of fixed assets as ordinary saleTrial balance agrees
Errors of Complete OmissionOmitting an entry completely from the subsidiary booksTrial balance agrees
Errors of Partial Omission– Omitting to post an individual amount or an entry from a subsidiary book – Omitting to post the totals of a subsidiary book – Omitting to write cash book balance in the trial balance – Omitting to write the balance of an account in the trial balance  The Trial balance does not agree
Error of Commission (1)Writing the wrong amount in the subsidiary booksTrial balance agrees
Error of Commission (2)– Wrong casting of subsidiary books – Posting the wrong amount in the ledger – Posting an amount on the wrong side – Wrong balance of an account – Writing a balance on the wrong column of the trial balanceThe Trial balance does not agree
Compensating ErrorsThe effect of one error is compensated by another errorTrial balance agrees

Error of Omission and Error of Commission

Error of OmissionError of Commission
These errors occur as a result of an act of omission on the part of the person in charge of maintaining the books of account.These errors occur as a result of a simple act of commission on the part of the person in charge of keeping the books of account.
It refers to the failure to record a transaction in the subsidiary books or to report it to the ledger.Ignorance, lack of basic accounting expertise, and negligence on the part of the accounting personnel are all factors that contribute to these errors.
An entry is not recorded or posted.An entry is recorded but incorrectly.
Depending on whether the error is partial or complete, the accounting entry may or may not be entered in the journal/subsidiary book.In case of error of commission, the accounting entry is recorded in the journal/subsidiary book, though inaccurately.
An error of complete omission does not impact the trial balance but an error of partial omission does.Depending on the type of error, an error of commission may or may not have an effect on the trial balance agreement.
Errors of omission are corrected in a single step. In the event of a complete error of omission, the necessary accounting entry is recorded to rectify the situation. In the event of a partial error of omission, the entry is posted into the appropriate ledger account through a rectification statement.Rectifying errors of commission is a little more difficult. They should be corrected by rectifying the wrong recording. Thus, it normally involves reversing the improper posting or entry and then recording a correct entry or posting to the correct ledger account on a fresh basis.
Difference between Error of Omission and Error of Commission


Errors should never be corrected by overwriting, whichever type they are. As soon as the errors are located, they must be rectified by following a proper procedure. If there is an error that affects two sides of an account or two or more accounts, then a correction should be made by making another suitable entry. But sometimes there are errors that affect only one side of an account or where it is not possible to pass a complete rectification entry. In such cases, a rectification statement on the appropriate side of the concerned account may be made. For instance, if the sales book is undercast by $250, it means that the Sales Account has been credited short by $250. Since the accounts of customers are posted with the individual sales figures, only the Sales Account is to be corrected as it is posted with the total of the sales book. Hence, the error can be corrected by making a rectification statement on the credit side of the Sales Account: “By under casting of Sales Book $250”.

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Ruchi Gandhi

The author enjoys to write informational content in the domain of company law and allied laws. She takes interest in doing thorough and analytical research on legal topics. She is a CA along with MBA (Fin) and M. Com.

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