Which type of error is committed due to wrong posting of transactions, wrong totaling or wrong balancing of the accounts?

Errors of Commission

The correct answer is option 4- Errors of Commission.

Errors of Commission- These are the errors which are committed due to wrong posting of transactions, wrong totalling or wrong balancing of the accounts, wrong casting of the subsidiary books, or wrong recording of amount in the books of original entry, etc. For example: Raj Traders paid 25,000 to Preet Traders (a supplier of goods). This transaction was correctly recorded in the cashbook. But while posting to the ledger, Preet’s account was debited with 2,500 only. This constitutes an error of commission. Such an error by definition is clerical and most of the errors of commission affect in the trial balance.

OTHER OPTIONS-

• Errors of Omission- The errors of omission may be committed at the time of recording the transaction in the books of original entry or while posting to the ledger.

• Errors of Principle- Accounting entries are recorded as per the generally accepted accounting principles. If any of these principles are violated or ignored, errors resulting from such violation are known as errors of principle.

• Compensating Errors- When two or more errors are committed in such a way that the net effect of these errors on the debits and credits of accounts is nil, such errors are called compensating errors. Such errors do not affect the tallying of the trial balance.