The
Definition Of

Error of omission

      An error of omission is one where a transaction has not been recorded in the books of account either wholly or partially. In the former case, it will not be detected by the trial balance, though it may be apparent in some cases, e.g., the rent for the last month of the year might not have been recorded in the books of account as it had not been paid to the landlord. In case the transaction has been partially recorded, e.g., if one aspect of the purchases or sales had been entered in the books, it will affect the trial balance and ultimately the profit and loss account.

Share it:

More from this Section

  • Revenue recognition principle
    The revenue recognition principle refers to the principle that companies recognize revenue in the accounting period in which it is earned. In a service enterprise, revenue is...
  • Cash payback technique
    Cash payback technique identifies the time period required to recover the cost of a capital investment from the net annual cash flow product by the investment.
  • Federal Unemployment Tax Act (FUTA)
    The Federal Unemployment Tax Act (FUTA) is another feature of the federal Social Security program. Federal unemployment taxes provide benefits for...
  • Divisible profits
    Divisible profits means those profits which can legally be distributed to the shareholders of a company in the form of dividends. It also does not say that only “true profits” can be divided.
  • Limited partner & Limited partnership
    Limited partner is a partner whose liability for the debts of the firm is limited to that partner’s investment in the firm. Limited partnership refers to a partnership...
  • Days in inventory
    A variant of the inventory turnover ratio is days in inventory that measures the average number of days inventory is held; calculated as 365 divided by the inventory turnover ratio.
  • Publicly held corporation
    Publicly held corporation is a corporation that may have thousands of stockholders and whose stock is regularly traded on a national securities exchange...