Your business is a sum of the little things you do; from the way your salespeople deal with customers to how you input numbers into balance sheets. The latter requires meticulousness and attentiveness to make sure that all numbers are correct.
Accounting North Ltd and other accountants in Auckland noted that a mistake in the balance sheet may mean the difference between staying competitive or losing market shares to a competitor. Knowing the mistakes that your staff may commit allows you to correct them immediately with the help of a third-party accountant.
Accounting may or may not be a dull task, so some people make data entry errors. This occurs when a person incorrectly inputs information from financial documents into databases. Transposition mistakes happen when someone reverses numbers like when a number is 28 but recorded as 82.
Incorrect Classification of Data
This error may affect the outcome of your balance sheet and other financial documents because it incorrectly classifies assets from liabilities or vice-versa. A mistake on the balance sheet will domino will both make your business look bad or good, and mislead your company’s financial future. Your company may seem more profitable than it is or makes it worse financially when an encoder misclassifies an asset and liability.
Error of Omission
This mistake occurs when an encoder or accountant fails to record certain data into the documents and database. This causes miscalculations or inaccurate information about the financial health and direction of your organization. Some examples of errors of omission include failure to update inventory quantities to current level or excluding certain expenses from the balance sheet.
These accounting errors (deliberate or not) may mislead your employees, investors, or customers into believing your company is either profitable or about to close. Preventing these mistakes are important to the success of your organization. Accounting is paying attention to the minute details of your business; however, if done correctly, it paints a clear picture of the financial direction of your business.