Limitations of Trial Balance

• Trial Balance


  A list of all the balances in a company's general ledger accounts
• Limitations of the Trial Balance

  Errors that may occur even when the total of the trial balance are the same
• Types of errors in the Trial Balance

  • Error of Omission
  • Error of Commission
  • Error of Original Entry
  • Error of Principle
  • Compensating Error
  • Error of Complete Reversal of Entries
• Error of Omission


  No entry made for a transaction
• Error of Commission


  Wrong name recorded for a transaction
• Error of Original Entry

  Wrong amount of money recorded for a transaction
• Error of Principle


  Wrong type of account used for a transaction
• Compensating Error


  When two errors cancel out each other
• Error of Complete Reversal of Entries

  Entries recorded on the wrong side of the account