Accounting Error

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DEFINITION of 'Accounting Error'

An error in an accounting item that was not caused intentionally. An accounting error can include discrepancies in dollar figures, or might be an error in using accounting policy incorrectly (i.e., a compliance error).

Accounting error should not be confused with fraud, which is an intentional error in an accounting item, usually to hide or alter data for personal gain.

BREAKING DOWN 'Accounting Error'

By doing what ever it can to follow accounting standards such as the Generally Accepted Accounting Principles (GAAP), and maintaining internal controls, a company can easily minimize accounting errors. Corrections of the errors are shown later, in a restatement of comparative financial statements.

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RELATED FAQS
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    In accounting, general and administrative expenses represent the necessary costs to maintain a company's daily operations ... Read Full Answer >>
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    Whether a dividend distribution has any effect on additional paid-in capital depends solely on what type of dividend is issued: ... Read Full Answer >>
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    The additional paid-in capital figure on a company's balance sheet can never be negative because companies do not pay investors ... Read Full Answer >>
  4. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  5. How does additional paid in capital affect retained earnings?

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