Everyone makes mistakes. Unfortunately, even accountants and bookkeepers sometimes make omissions, miscalculations or even simply typographical errors. Working with a lot of numbers can make it confusing. And when you suddenly find out that your balance sheets don’t balance at all, you will want to find out the exact source of your error.
Looking for errors might be a tedious job if you don’t know where to look. However, you can use some clues so that you can easily spot where the potential errors lie.
What’s important when you’re looking for accounting and bookkeeping errors is to keep focused. Get yourself into the mood of hunting for errors, and keep a clean, uncluttered environment so you can remain focused. This might take some time so get yourself ready for extended periods of hunting and recomputing.
Wrong amounts. One common accounting and bookkeeping error is a wrong amount entry. Once you have one figure wrong, then you are likely to have your final results wrong, too. Sometimes, this can be a result of keying in the wrong key. This can be due to the following:
- You skipped a line from the data you are entering.
- You might mix data from one line with another.
You might also enter wrong amounts due to plain errors.
- You might have missed a decimal point. For example, 15.96 might become 159.6 or 1,596 even. This can be a big mistake, but it will look obvious if the other figures are within the tens level.
A good way to resolve this issue is to slow down. You might already be fatigued with reading a lot of numbers. Take a break and try double-checking your work.
Swapped numbers. Another common accounting and bookkeeping error involves swapping numbers. This can be common when dealing with numbers that look alike, such as 2 and 5.
- For example, 15,225.52 might be written as 15,255.52, which is off by 30.
- In some cases, you might have the digits swapped. 15,225.52 might become 15,252.52, which is off by 27.
One possible solution here is, again, slowing down. You can also print out figures so you can read them better as you encode the data. You can also zoom in using your spreadsheet software’s zoom function. This lets you read those digits more easily.
Wrong decimal placement. This can result in software-entry when you have setup your spreadsheet to automatically input decimal points, just like in a cash register or ATM machine.
- For example, if you key in 1520, the system will automatically transpose it to 15.20.
- However, if you accidentally key in “1520.” (with the period), then the system will recognize it as 1,520.00, which is a big difference.
Wrong account. Another potential accounting error is when you place a transaction under the wrong account. For example, if a cost item is taken from one bank account instead of another, you might have conflicting totals later on.
One tip to solve this is by double-checking your figures—where they come from and where they are intended to go.
Wrong column or side. In accounting, the debit and credit side can sometimes be confused, especially when you are working with multiple accounts. The amount you credit from one account will usually be debited from another (such as when transferring funds from cash to an account). If you make a mistake in listing the transaction, then this will result in mismatched figures.
There’s no substitute to knowing just the right accounting principles here, so you know whether to debit or to credit an item. As a rule, enter the debits before you enter credits.
Double check everything. Even if your sums balance with each other, you might still be able to spot accounting problems. For example, debits might equal credits, but you might just have inputted something incorrectly. Be vigilant and alert in spotting potential sources of inaccuracy.