Avoiding Transposition Errors

transposition errors

As this number is divisible by 9, there may be a transposition error. In particular, you may have written $840 as $480 or $510 as $150, causing the $360 difference. A trial balance is the sum of credits and debits for all your business’ accounts. If the sum of all your credits and debits for a given account are the same (i.e. balance) then you’re good to go!

You may never face such dire consequences within your organization. Nevertheless, transposition errors can lead to a never-ending list of problems that are difficult to correct. Fortunately, the right combination of tools and processes makes it easy to catch transposition errors before it’s too late. For example, the credit sales of $5,670 have been recorded as $5,760. Adding a journal entry may be enough to correct an accounting error.

This content is for information purposes only and should not be considered legal, accounting, or tax advice, or a substitute for obtaining such advice specific to your business. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. A transposition error can be corrected by identifying the exact point where the error occurs. This can be done using thorough bookkeeping audits and using proper checks and balances to prevent such errors.

Types of Error in Accounting?

You skim over your journal entries and see the $1,180 you accidentally wrote down. When managing a business, it’s always better to be safe than sorry. This type of mistake is clearly noticeable because your client’s sub-ledger will be off. The first step is differentiating the incorrect and correct amounts.

  • That way you can catch errors right away and prevent them from loitering around your  accounting.
  • This mistake happens when two digits are reversed (or “transposed”).
  • For example, if you enter an invoice once the deadline for disbursement has passed, you have to pay an additional charge and interest.

This type of journal entry is called a “correcting entry.” Correcting entries adjust an accounting period’s retained earnings i.e. your profit minus expenses. Correcting entries are part of the accrual accounting system, which uses double-entry bookkeeping. This means the correcting entry will have both a debit and a credit. Many accounting errors can be identified by checking your trial balance and/or performing reconciliations, such as comparing your accounting records to your bank statement. The errors of transposition are one of the accounting errors that incur as a result of the wrong digit of the number has been accidentally recorded the other way round.


Not only is it time-consuming, but it opens your business to a ton of potential accounting errors. The accounting errors, then, can be divided into two main groups; the errors where the trial balance still balances and errors that cause the trial balance imbalance. Before the arrival of printing, the copyist’s mistake or scribal error was the equivalent for manuscripts. Most typos involve simple duplication, omission, transposition, or substitution of a small number of characters. Reconciliation errors are errors that occur during the process of making all the accounts or books consistent or congruent. Reconciliation is another important aspect of the accounting process.

Transposition errors in Excel – Journal of Accountancy

Transposition errors in Excel.

Posted: Sat, 31 Mar 2012 07:00:00 GMT [source]

A quick way to check for either a transposition or a slide is to find the difference between the debit and credit column totals of the trial balance and divide this amount by 9. The technical term for accidentally switching the order of numbers (ie. entering “$4200” when the actual figure is “$2400”) is a transposition error. A simple typo of this sort can lead to a loss of time, money and resources. In certain industries, these typos can even affect the safety and well-being of customers, patients and others.

Transposition errors

Don’t get us wrong, not falling behind schedule is just as important. However, it’s best to consider ways to simplify the accounting process, such as by using accounting software. When finances are full of errors, a business becomes unreliable in the eyes of outsiders. Whether these result from process inefficiencies or simple human error, clients and investors will lose trust nonetheless. The correcting entry has to be double the amount of the previous error. Then, once the issue is identified, a correcting entry of the suspense account is carried out.

transposition errors

These two errors cancel each other out and the trial balance remains at the same amount both debit and credit. True/False Reversing the order of two numbers is a transposition error. True/False If you discover an error before posting, a correcting entry is required. True/False Every journal entry requires a posting to at least two accounts. It’s important to establish a routine where you review and carry out reconciliations of your accounting records on a regular basis. That said, accounting errors will still happen no matter how thorough and frequent your reviews.

Employers can also make a transposition error when running payroll. Let’s say you reverse the numbers of an employee’s hourly rate while entering information into your payroll software. Businesses that use the cash accounting method could eliminate virtually all manual transactions by having their software automatically import bank transactions. For example, instead of manually entering expense receipts, look into an expense tracking app that automatically updates your accounting software with expenses. Additionally, you may want to reconcile bank statements with accounting records every month.

Spread the cards out on the ground and ask students to match up numbers. This document/information does not constitute, and should not be considered hr transformation a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general.

Sync your bank account with your accounting software

A transposition error refers to switching two of the digits in an accounting entry. For example, if a bookkeeper is recording an expense for $37, but he notes $73 in the books, that is a transposition error. Some transposition errors are small and insignificant, but large errors can lead to incorrect information on tax forms, shareholder reports, and other important accounting documents. To avoid transposition errors, consider minimizing manual bookkeeping.

transposition errors

Usually, this mistake isn’t found until you do your bank reconciliation. That said, the first step in correcting accounting errors is to identify those errors. With tools like automatically syncing your bank feed in QuickBooks, it’s easy to become complacent and feel the need to eliminate double-checking your bank statements. However, you may find that the bank has made errors of their own that transfer into QuickBooks and create a compounding error effect.

Duplication errors

If the entry is occurring in data capture forms, databases or subscription forms, the designer of the forms should use input masks or validation rules. But first, let’s take a quick step back and talk about where you can find number discrepancies. You might spot a transposition error in trial balance, when your accounts don’t equal.

A transposition error in accounting is when someone reverses the order of two numbers when recording a transaction (e.g., 81 vs. 18). This type of accounting error is easy to make, especially when copying down transactions by hand. You might make a transposition error when writing a two-digit number or a string of numbers (e.g., 1835 vs. 1853).

One of the problems with forgetting to enter data goes back to data integrity. Transposition errors can lead to significant discrepancies in a company’s books. They can cause discrepancies between internal records and bank statements, distort balance sheets, profit and loss accounts, and other financial statements. Transposition errors are commonly
mistaken for transcription errors, but
they should not be confused. As the
name suggest, transposition errors
occur when characters have
“transposed” — that is, they have
switched places. The
most common way for characters to be
transposed is when a user is touch
typing at a speed that makes them
input one character, before the other.

Transposition error fixed on ballots for Precinct 402 in Midland County – NewsWest9.com

Transposition error fixed on ballots for Precinct 402 in Midland County.

Posted: Mon, 24 Oct 2022 07:00:00 GMT [source]

This means that two or more errors have occurred and those errors canceled each other; thus the total debits and credits remain the same. For example, a business may be saddled with an increased tax liability if the transposition error is large enough to slingshot that company into a higher tax bracket. Of course, this largely depends on the degree of error in question. If a bookkeeper mistakenly writes $24.74 instead of $24.47, the resulting $0.27 discrepancy would hardly be consequential. On the other hand, if $1,823,000 were accidentally recorded as $1,283,000, the resulting $540,000 error is sure to have a profound financial ripple effect.

Fat finger or fat-finger syndrome (especially in the financial sector) is a slang term referring to an unwanted secondary action when typing. When a finger is bigger than the touch zone, with touchscreens or keyboards, there can be inaccuracy and one may hit two keys in a single keystroke. An example is buckled instead of bucked, due to the “L” key being next to the “K” key on the QWERTY keyboard, the most common keyboard for Latin-script alphabets. When utilizing any accounting system, it’s important that you train your employees on how to use it properly and take advantage of the advanced features it has to offer.