Clerical errors occur due to copying, posting, or writing mistakes. These are typically made by accounting or clerical staff during entry in the books of original entry (e.g., journals) or the ledgers.

Errors can be categorized into:

1. Errors NOT affecting the agreement of the trial balance
2. Errors affecting the agreement of the trial balance

Even when the debit and credit totals agree, errors may still exist. These do not affect the arithmetical accuracy, but distort financial information. These errors are often harder to detect.

Types

1. Errors of Omission
   Entire transaction is not recorded.
   Example: Purchase from MUPSA Co. Ltd worth TZS 200,000 completely omitted.
2. Errors of Commission
   Correct amount entered into the wrong account of the same class.
   Example: Sale of TZS 11,000,000 to Chacha Godfrey posted to Kasim Godfrey's account.
3. Errors of Principle
   Transaction recorded in the wrong class of account.
   Example: Purchase of a van (a non-current asset) debited to Motor Expenses (an expense).
4. Errors of Original Entry
   The initial recording was made using the wrong amount, but debited and credited equally.
   Example: Cash purchase of TZS 23,000,000 recorded as TZS 32,000,000 in both cash and purchases accounts.
5. Compensating Errors
   Two or more errors that cancel each other out.
   Example: Overstated sales and overstated purchases by TZS 70,000 each.
6. Complete Reversal of Entries
   Correct accounts are used, but amounts are posted to the wrong sides (debit/credit).
   Example: Cash sales of TZS 800,000 credited to Cash and debited to Sales.
7. Transposition Errors
   Digits are accidentally reversed.
   Example: TZS 10,450,000 recorded as TZS 10,540,000.

Example

The following business transactions were recorded in the books of Mtakuja Enterprises in different dates of January, 2022.

Jan. 1 A credit purchase of TZS 500,000 from Mwigazi Ltd was omitted when recording in a day book. Jan. 3 Sales of TZS 250,000 to Maganga, has been posted to Mganga account. Jan. 6 Purchases of furniture from Rafiki Enterprises Limited of TZS 1,000,000 have been posted to purchases day book. Jan. 8 Interest paid TZS 50,000 to CRDB Plc Bank was recorded as TZS 5,000 in the journal entries. Jan. 12 Sales account was over casted by TZS 100,000 while salary's expenses account was also over casted by TZS 100,000. Jan. 18 Amount of TZS 350,000 paid to supplier had been debited to cash book and credited to supplier's account. Jan. 24 TZS 520,000 received from a debtor had been recorded as TZS 250,000 in the general journal.

Required

Show the journal entries needed to correct accounting errors for Mtakuja Enterprises.

Solution

Example

The following are the business transactions of Kayamu Enterprises recorded in different dates for the month of April, 2022:

April 4 Extra capital of TZS 5,000,000 paid into the bank had been entered in sales account April 8 Goods taken for own use TZS 50,000 had been debited to sundry expenses account. April 11 Credit sales of TZS 150,000 was omitted in the books of account. April 17 Repairs to motor van TZS 1,500,000 have been debited to motor van account. April 26 Cash received from Mr. Moro TZS 350,000 was credited to Mr. Omoro account.

Required

Give the journal entries to correct the different errors recorded in the books of Kayamu Enterprises (ignore narrations) in different dates of April, 2022.

These errors do cause a difference in the totals of the debit and credit sides of the trial balance.

Types

1. Single Entry
   Only one side of a transaction is recorded.
   Example: Cash sale of TZS 100,000 recorded only in the cash book.

2. Overcasting and Undercasting

   • Overcasting: Amount is overstated due to excess addition.
   • Undercasting: Amount is understated due to short addition.
     Example: Purchases understated by TZS 1,000,000 → trial balance shows lower debit total.

3. Wrong Amount Posted
   Only one part of the entry carries an incorrect amount, causing a mismatch.
   Example: Purchase returns of TZS 680,000 credited as TZS 860,000 while creditor was debited with the correct amount.