What is an out of sequence transaction?

An out of sequence transaction refers to a transaction that occurs after a previous transaction but is recorded with a date that is earlier than that transaction. This scenario can create confusion within financial records and reporting because it disrupts the chronological order of transactions. It highlights issues with data entry or processing and may necessitate corrective action to maintain accuracy in reporting and ensure a clear audit trail.

The other options illustrate different concepts. An incorrectly recorded transaction pertains to data entry errors without necessarily addressing the temporal sequence of transactions. A transaction that does not match any previous records relates to discrepancies or anomalies but doesn't inherently indicate a timing issue. A duplicated transaction indicates a repeat entry in the records, which can lead to inflated figures but does not deal with the chronology as an out of sequence transaction does. Understanding these distinctions can help maintain accurate and reliable records in business operations.