Accounting Error

An accounting error is an unintentional mistake in a financial record — a wrong amount, a misclassified transaction, a reversed entry, or a data entry typo that causes your books to be inaccurate.

Accounting Error Definition

An accounting error is an unintentional mistake in a financial record. Unlike fraud (which is deliberate), accounting errors happen by accident — a typo, a misclassification, a transposed number, or a missed entry.

Types of Accounting Errors

Error of omission — a transaction was never recorded at all

Error of commission — recorded to the wrong account within the right category

Error of principle — recorded to the wrong type of account entirely (e.g., capital expense booked as operating expense)

Compensating error — two errors that cancel each other out, hiding both

Transposition error — digits swapped (recording $1,350 as $1,530)

Error of original entry — wrong amount recorded from the start

How to Find Accounting Errors

1. Bank reconciliation — compare your books to your bank statement monthly

2. Trial balance — if debits don't equal credits, there's an error

3. Variance analysis — compare current period to prior periods; big swings may indicate errors

4. Account review — scan individual accounts for entries that don't belong

How Accounting Errors Show Up in QuickBooks

QuickBooks flags some errors automatically (unbalanced journal entries, duplicate transactions). But many errors — especially misclassifications — won't trigger any warning. Regular review is essential.

FAQ

Q: How do I correct an accounting error in QuickBooks?

A: For recent errors, edit the original transaction directly. For errors in closed periods, create a correcting journal entry rather than modifying historical records.

Related Terms

> Need help making sense of your books? Ketchup cleans up your QuickBooks in 3–7 business days — so your numbers actually make sense. Get your price →

Related Terms

Overhead

Overhead refers to the ongoing business expenses that aren't directly tied to producing a specific product or service. These are the costs of keeping your business running — rent, utilities, insurance, office supplies — regardless of how much you sell. Overhead is also called "indirect costs" becaus

Payroll Expense

Payroll expense is the total cost a business incurs to compensate its employees. This includes gross wages, salaries, bonuses, and commissions — plus the employer's share of payroll taxes (Social Security, Medicare, unemployment). It's typically one of the largest expense categories for any business

Source Document

A source document is the original record that provides evidence a financial transaction occurred. These are the paper trail of your business — invoices, receipts, bank statements, contracts, purchase orders, and canceled checks. Source documents are the foundation of every bookkeeping entry and the

Current Assets

Current assets are resources your business owns that can be converted to cash within one year or the normal operating cycle, whichever is longer. They include cash, accounts receivable, inventory, prepaid expenses, and short-term investments. Current assets appear at the top of your balance sheet an

Need these terms applied to your books?

Accounting Ketchup catches up your QuickBooks so the glossary becomes your reality. Flat rate.

Get My Price →