Accounting Concepts / Error that Do not Effect the Trial Balance

Business Entity

The business is separate from owner

Money Measurement

Only money values recorded

Dual Aspect Concept

Every transaction has two effects.

Assets= Capital + Liabilities

Going Concern

The assumption that a business will continue to operate

Consistency

The same accounting method should be used each period

Prudence

Assures that assets and income are not overstated, and liabilities and expenses are not understated.

Matching Concpet

Expenses should match with revenue

Historical Cost Concept

Assets and liabilities should be recorded at their original purchase price

Objectivity Concept

The practice of presenting information in an unbiased manner

Omission

Transaction is completely left out of the books

Commission

Transaction is posted to the wrong person’s account.

Principle

Transaction is recorded in the wrong type of account.

Original Entry

Wrong amount is recorded.

Compensating error

To errors cancel each other out.

Complete Reversal

Debits and credits are reversed.