Transposition Error

AAA

DEFINITION of 'Transposition Error'

A simple error of data entry. Transposition errors occur when two digits that are either individual or part of a larger sequence of numbers are reversed (transposed) when posting a transaction. Although this error is small and unintentional, it can result in huge financial losses or errors in some instances.

INVESTOPEDIA EXPLAINS 'Transposition Error'

When two adjacent numbers are transposed, the resulting mathematical error will always be divisible by 9 (e.g. (72-27)/9 = 5). Bank tellers can use this rule to quickly find their errors in many cases. Transposition errors also occur in accounting firms, brokerages and all other areas of finance.

RELATED TERMS
  1. Balance Sheet

    A financial statement that summarizes a company's assets, liabilities ...
  2. Bank

    A financial institution licensed as a receiver of deposits. There ...
  3. Bounced Check

    A slang word for a check that cannot be processed because the ...
  4. Bank Draft

    A type of check where the payment is guaranteed to be available ...
  5. Accounting Control

    Methods and procedures that are implemented by a firm to help ...
  6. Bad Check

    A check drawn on a nonexistent account or on an account with ...
Related Articles
  1. The Evolution Of Banking
    Credit & Loans

    The Evolution Of Banking

  2. Becoming A Financial Analyst
    Professionals

    Becoming A Financial Analyst

  3. Your First Checking Account
    Insurance

    Your First Checking Account

  4. Choose To Beat The Bank
    Options & Futures

    Choose To Beat The Bank

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center