Avoiding Transposition Errors

by Greg DePersio

1 min read

A transposition error refers to switching two of the digits in an accounting entry. For example, if a bookkeeper is recording an expense for $37, but he notes $73 in the books, that is a transposition error. Some transposition errors are small and insignificant, but large errors can lead to incorrect information on tax forms, shareholder reports, and other important accounting documents. To avoid transposition errors, consider minimizing manual bookkeeping. For example, instead of manually entering expense receipts, look into an expense tracking app that automatically updates your accounting software with expenses. Additionally, you may want to reconcile bank statements with accounting records every month. You can do this visually, but most accounting software has tools to automate the process. Double-entry bookkeeping can also help to reduce transposition errors. In this type of bookkeeping, all entries are made twice, making it easier to spot discrepancies. There’s also a mathematical trick that can help you spot transposition errors. If the difference between two numbers that should be the same is divisible by 9, you may have a transposition error in your records. To explain, imagine you are comparing your total monthly expenses with the total spent on your business credit card. The totals should be the same, but there is a difference of $360. As this number is divisible by 9, there may be a transposition error. In particular, you may have written $840 as $480 or $510 as $150, causing the $360 difference.

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