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What are common accounting errors, and how do you prevent them? 

The accounting system is one of the essential aspects of the business as it will state the company’s financial status. Accounting is also crucial for tax preparation and other government compliance obligations. Therefore, it is essential to have everything right without any error. 

So, in this article, we will discuss some common accounting errors and how to prevent those errors for real-time financial data in Halfmoon. There are also some tax preparation services in Halfmoon that you can consult to learn more about common accounting errors. 

What are Common Accounting Errors? 

  • Data Entry Errors: This error is made while entering the items in the accounting system. For instance, there are errors like entering the wrong items in the wrong account, transporting numbers, omitting or duplicating an entry, leaving or adding a digit or a decimal place, considering expenses as income, and other accounting mistakes. 
  • Error of Omission: It fails to record an item in the accounting system. It is not an intentional error but an overlooked error. For instance, if an invoice was paid but the receipt failed to be noted, It can happen due to misplaced documentation and affect the accounting system. 
  • Error of Commission: It is mishandling an item by putting it in the wrong place. It can happen when you enter the amount correctly and in the correct general account but under the wrong subaccount. 
  • The error of Transposition is the incorrect amount recorded by reversing the numbers. This error can lead to overstating an item’s amount due to transposing a number. 
  • Compensating Error: This error occurs when two errors arise simultaneously. In this, there will be one offsetting the other error; thus, the net effect will be zero. It is also difficult to detect. 
  • Error of Duplication: By the name itself, we can understand when there is an entry of the same item two times. It can be of income or expense that takes place more than two times. 

How to Prevent Accounting Errors? 

  • Hire an experienced accountant to enter expenses and income into the accounting system. You must take your time to fully explain the system to the accountant and train them on how you want your accounts. 
  • It would help if you did not overload your employees because the overload can lead to simple entry errors without adequate time to handle the activity. 
  • Adapt the new technologies and accounting software to simplify the accounting process. 

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