ERRORS NOT DISCLOSED BY TRIAL BALANCE :
The agreement of a trial balance is only a check of arithmetical accuracy of the ledger but it is not a conclusive proof as to the absolute accuracy of the books. The following errors will not affect the agreement of trial balance and hence are not disclosed by the trial balance:
(i) Errors of Complete Omission: If a transaction was not recorded at all, the agreement of the trial balance will not be affected. For example, if goods worth ` 2,000 have been received back from a customer and the entry has not at all been made in the Returns Inwards Book then, the Customer’s Account will not be credited and the Returns Inwards Account also will not be debited. Thus, there will be no debit and credit, and the trial balance will agree even though there is a mistake.
(ii) Errors of Commission: If a transaction was debited or credited to a wrong account with correct amount and on the correct side in the books of original entry or in the ledger, trial balance will remain unaffected.
(iii) Compensatory Errors: These are errors which are neutralized by the commission of another error or errors of the same magnitude but of opposite nature, which makes the trial balance to agree. For instance, the overcasting of a sales book by (say) ` 3,000 and thereby the excess credit to the sales account, will be arithmetically off-set either by over debiting or under crediting a single account or several accounts with a total sum of ` 3,000.
(iv) Errors of Principle: Errors of principle like furniture purchased debited to purchase account, building sold credited to sales account, commission paid for purchase of land debited to commission account etc. will not affect trial balance as they are related to allocation of amount received or spent between revenue and capital. There will be no effect on trial balance because double entry will be passed and one account will be debited and other credited. So the debit and credit side of trial balance will definitely agree.
(v) Recording Wrong Amount in Subsidiary Book: If a wrong amount is written in subsidiary books, then entries on both the debit and credit sides will be on the basis of the wrong amount and then the trial balance will naturally agree.
(vi) Errors of Duplication: This is the error of entering a transaction more than once in the subsidiary books.