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. Bad Check

    A check drawn on a nonexistent account or on an account with ...
  2. Balance Sheet

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

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

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

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

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

Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  3. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  4. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  5. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  6. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
Trading Center