Errors of commission

Definition and explanation

An error of commission happens when a transaction is recorded in a wrong account instead of the account in which it should have been recorded. In this case, the account in which the transaction is wrongly recorded belongs to the same class as the one in which it should have been recorded.

For example, the purchase of goods from Mr. X is wrongly credited to Y’s account instead of X’s account. This is an error of commission. Because both X account and Y account are liability accounts by classification, this error will not disturb the agreement of the trial balance.

Note: On this page, we shall focus on only those errors of commission that do not affect the agreement of the debit and credit totals of the trial balance. Please note that some of the errors of commission do affect the agreement of the trial balance, and such errors can be revealed by preparing a trial balance.

Journal entry to rectify errors of commission

An error of commission that does not affect the agreement of the trial balance can be rectified by making a journal entry as follows:

• If an amount has been mistakenly debited to a wrong account, then the right account is debited and the wrong account is credited to rectify the error.
• If an amount has been mistakenly credited to a wrong account, then the wrong account is debited and the right account is credited to rectify the error.

Here the words “wrong account” mean the account in which the entry has been mistakenly recorded, and the words “right account” mean the account in which the entry should have been recorded.

Let’s take a couple of examples to further clarify the procedure for rectifying errors of commission.

Examples of errors of commission

Example 1

Mr. Nadeem and Mr. Nabeel are two different suppliers of goods. A payment of $250 made to Mr. Nadeem was mistakenly debited to the account of Mr. Nabeel.

In this case, the error has affected the Nadeem account and the Nabeel account. An amount of $250 paid to Nadeem should have been posted on the debit side of the Nadeem account, but it has been wrongly posted on the debit side of the Nabeel account. Since both accounts are liability accounts, the debit and credit columns of the trial balance will remain in agreement despite this error.

To rectify this error of commission, the Nadeem account will be debited, and the Nabeel account will be credited to cancel the impact of the wrong debit given to it. The rectification entry will be made as follows:

Example 2

Southern Company received $3,500 cash from ABC Traders but wrongly credited the account of XYZ Traders. Both ABC and XYZ are credit customers of Southern.

In this case, the cash received from ABC Traders has been wrongly credited to the account of XYZ Traders instead of the account of ABC Traders. The error is in two accounts, i.e., in the account of ABC Traders (which has not been credited) and in the account of XYZ Traders (which has been wrongly credited). This error will cause no discrepancy in the trial balance because both accounts belong to the same group, i.e., the asset.

To rectify this error, Southern will debit the account of XYZ traders to cancel the wrong credit given to it and credit the account of ABC traders. The rectifying journal entry will look like the following: