Bookkeeping Information and Errors

Errors in bookkeeping can lead to grave consequences for any organisation or company

. There are many parties that are interested in having access to the bookkeeping information of a company. To know about the duties and taxes to be imposed, governments need relevant financial information from the companies. Employment and stability of business go hand in hand. So, trade unions could be interested in having information related to the performance of the company since the profit made by the firm would be shared in the form of bonuses and other perks. The employees are, therefore, naturally interested in the accounting figures and other factual information provided by the annual bookkeeping and accounting reports. Regarding consumers, price-increase is one aspect that does not find favour among the consumer population. In accordance to this, a manufacturer or producer will try to reduce his products cost as well as its selling price. Of late, consumer protection forums have been formed with the intention to exercise control over prices and the industry. They also try to make them aware of the social responsibility they have towards society. This way, consumers are also in need of accurate bookkeeping information. Researchers and analysts also look forward to the financial statements of different companies. This is because financial statements constitute the mirror of business conditions and these figures are of great value to people doing research regarding the various business affairs. These financial statements are of great interest to research scholars who undertake researches in accounting information and the various types of business practices followed by these organisations conducting business. Bookkeeping figures enable one to learn whether a business operation has resulted in profits during the relevant accounting period. Bookkeepers prepare trial balance to check the accuracy and exactness of accounts. If the total of debit balances does not match with the total of credit balances, it indicates that some errors have occurred while recording the financial transactions in the books of original entry or other subsidiary accounts. It is the primary duty of bookkeepers to spot these errors and to correct them. After the mistakes in accounts are corrected, one may proceed to prepare the final accounts. It is common knowledge that not all types of errors are recognised by trial balance since some of the errors do not have any notable effect on the trial balance. A bookkeeper should invest his talent and analytical skills to trace different types of errors and has to rectify them before making profit and loss statements and balance sheets. In case, he prepares the statements before correcting the mistakes, the reports will not deliver the correct result. For instance, when a financial transaction is recorded in stark contrast to the fundamental principles of bookkeeping, it is called as an error of principle. Another type of error is called clerical errors. When a financial transaction is either wholly or partially not indicated in the record books, it constitutes an error of omission. Still another error called errors of commission occurs when an entry is incorrectly made; and this can affect the trial balance figure.

Bookkeeping Information and Errors

By: vish ks

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