Examples of Accounting Problems With T-Accounts

by Scott Shpak
Double-entry accounting, the origin of T-accounts, is a system over 500 years old.


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T-accounting is a method used by accountants and bookkeepers that gets its name from the T shape formed by the two columns used to record entries. Also called double-entry accounting, T-accounting provides a visual aid to see how debits and credits affect accounts in the general ledger. While accounting programs have made T-account data entry obsolete, most programs re-create double entries within the software and create reports in this familiar format.

T-Account Data Entry Principles

Before computer software became the norm for bookkeepers and accountants, business was tracked by way of handwritten journals using T-accounts. Each account listed debits and credits, on the left and right sides of the T-account page, respectively. Every transaction was entered twice, once as a debit and once as a credit, in two accounts. This provided an easy way to check for errors, as the sum of debits would match the sum of credits. When a journal didn't balance in this way, the problem could be found and corrected prior to posting in the general ledger.

Trial Balances

The process of checking each T-account for debit and credit balance is called a trial balance. Any errors found at this stage are corrected then, once the trial balance passes, the bookkeeping stage ends and the data enters the accounting stage, where it is adjusted and organized into reports. The trial balance function is largely handled by software now. The bookkeeper enters a transaction once, and the accounting software handles the double-entry portion in its code. If the software is set up properly for a business, the trial balance will always be in balance.

Errors of Principle

An error of principle is a problem created when generally accepted accounting principles are not followed or incorrectly applied to T-accounts. An example of an error of principle might be treating an equipment purchase as an expense rather than a capital cost or recording an administrative worker's salary as direct labor in a manufacturing setting. While errors of this type will not cause trial balance or other mathematical errors, these will affect allocation of debits and credits and may cause inaccurate reports.

Errors of Commission

Errors of commission refer to T-account data that is recorded incorrectly. This could include simple problems such as leaving off a zero or misreading a handwritten number. Entries could be made to the correct accounts but with debit and credit amounts reversed. Transposition errors occur when numbers are reversed, such as 31 entered as 13. If an out-of-balance amount is divisible by nine, chances are there is a transposition error, since the difference of two transposed numbers is always divisible by nine.

Errors of Omission

When a transaction is partially recorded or entirely missing, it is an error of omission. Examples include forgotten adjustments or calculations or transactions that are simply missed. Partial omissions may show during trial balance procedures on T-accounts. Complete omissions may be difficult to pinpoint using T-accounts.

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