What comes to your mind when you hear Error and Precision at the same time!?
Though the world is going digital in many sectors, errors are prone to happen!
But in this wild world, getting work done with accuracy still feels like hitting a jackpot.
But when it comes to accounting, teensy-weensy errors can give you shockwaves through financial reports, account mismatches, and even unexpected Dr/Cr transactions.
Still, with AI-powered accounting automation software, you can jazz up your number game and kick errors sideways - reducing them by a whopping 90%!
AI-based accounting software dives deep into your data so that you can say goodbye to the oh-so-human errors that sneak into the accounting process.
Typos? Bye-bye! Miscalculations? Not on AI’s watch! Inconsistencies? Sayonara! Bid farewell to the wonky data headache and welcome the AI peace of mind that turns accounting chaos into precision perfection.
Let’s see what kind of errors this accounting automation software kicks out and how you can make the most out of it to achieve that shiny number, 90!
Types of Accounting Errors
We're diving deep into the two big baddies of accounting errors: the Errors of Principle and the Clerical Errors.
Error of Principle:
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Definition: It occurs when a transaction violates the established rules of accounting, specifically the debit-credit relationship.
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Impact: Though it does not affect the trial balance, it results in transactions being recorded in incorrect accounts.
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Example: Recording the purchase of an asset as an expense in the account.
Clerical Errors:
Definition: It arises from the improper recording of transactions. Further, it is categorized into three types.
a. Errors of Omission:
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Complete Omission: Forgetting to record a transaction in the books of accounts.
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Partial Omission: Recording a transaction on one side (debit or credit) and forgetting the opposite side.
Examples:
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Complete omission – Fail to record the purchase of an asset.
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Partial omission – Recording credit sales to Person X without accounting for it in Person X’s account.
b. Errors of Commission:
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Result from negligence in recording transactions, impacting the trial balance.
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Examples: Recording incorrect amounts, incorrect totalling, or posting on the wrong side of ledger accounts.
c. Compensating Errors:
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Definition: Occurs when one wrong entry neutralizes the impact of another wrong entry.
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Example: Recording a purchase by Person Y incorrectly as ₹400 instead of ₹4000 and simultaneously recording a payment by Person X incorrectly as ₹400 instead of ₹4000. Both errors cancel each other out, not affecting the trial balance.
Also read: Achieve 20x Faster Data Entry with Suvit's Intelligent Accounting Automation.
Now that you know the types of accounting errors, let’s find out how to resolve them!
How Does Suvit Identify The Errors And Eliminate Them? Let’s See!
Data Entry Errors
Mistakes in data entry are such as swapping numbers, typographical errors, and other slip-ups, often occurring manually, such as misplacing a decimal.
With Suvit, this will not happen at all! Why? Because we have knocked out the manual entries with automation.
Error of Commission & Error of Principle
Suvit's got these nifty tools that play by the rules. They're like the superheroes of consistency, always sticking to the standards and policies to keep errors of commission and errors of principle in check. It's like having a guardian angel for your accounting precision!
Errors of omission
These errors occur when a transaction is overlooked and not recorded. It just gets left out of the accounting records. But, in the scope of Suvit, no transaction lefts out!
Account Reconciliation
Timely performance of account reconciliation with Suvit saves you from last-moment unwanted goof-ups.
Also read: Transformation Of The Accounting Industry Through Fintech Innovations
Now that you know how you can eliminate errors with accounting software let's see how you can seamlessly shift to this process from the traditional accounting process:
Transitioning From Old-School To Automated Accounting Software With Ease!
Here are 7 quick tips to make the transition smooth:
- Watch out for your current accounting practices and find areas that can be done better.
- Research for the right automated accounting software that suits your needs and doesn't break the bank.
- Choose a software that lets you make custom invoices and works well with your ERPs and banks.
- Make sure your team gets the training and enough time to get used to the new software.
- Plan a time for the change and let everyone know, especially key people like the CFO, accountant, and finance department.
- Set up the right IT foundation and culture in your company so that everyone can switch to automated accounting smoothly.
- Once you start using modern accounting systems, you'll see your accounting process get better and get a good return on your investment.
Also read: Tally on Mobile: Accounting for the Mobile Age
Why 90% And Not 100%?
Nailing accurate accounting is the VIP pass to successful business management. Now, let's face it: we can't banish every accounting error, but we can set up some cool processes and controls to keep them on a tight leash.
First things first – let's decode where these sneaky errors usually pop up. Enter stage left: automated accounting software! When this tech maestro teams up with a bunch of preventive and detective controls, you get yourself an accounting arena that's less error-prone!
Open The Door Of Automated Accounting Software With Suvit
Suvit's technology not only streamlines the process but also delivers a level of precision that manual operations struggle to reach.
Since Suvit is cloud-based, you can keep all your records/documents in one spot and get to them from anywhere.
Get all the good stuff without needing a credit card!
There's always room to take things up. The sooner you dive into the tech vibes, the quicker your company becomes a futuristic rockstar! So, what's the holdup? Try Suvit free for a week. Sign up here!
