Rectification of error
CLASS 11
ACCOUNTS
NOTES
RECTIFICATION OF ERROR
A matched the trial Balance (Debit = credit) is not a conclusive
proof of the complete correctness of Books of accounts.
even when the trial Balance matches, some errors may still
remains in accounting records.
Ex Not recording the entry.
→ credit transaction is recorded as cash transaction.
→ Amount undercast (both the side). and so on
Types of errors
Compensating errors (not
error of omission
affect T.B)
(bhul jaana)
↓
(partly or completely)
Effect of one error is nullified
↓ ↓ by another error
do affect does not Ram A/c is debited will 500
trial Affect trial instead 5000 and shyam A/c
balance Balance is debited with 5000 instead
of 500.
error of Commission error of principle
↓ ↓
wrong recording Contravention of Accounting principles
wrong casting ↓
wrong balancing Such as
wrong carry forward - revenue exp is charged as Capital exp.
(related to amt. ) - Asset purchase is recorded in
purchase Book etc.
↓
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Not Affect T.B
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NOTES
RECTIFICATION OF ERROR
Classification of errors
not affecting trial
Affecting
balance
trial balance or
or
one side errors
double sided errors
↓
it affect only 1 A/c
↓
more than one
Rectification of errors
1. Before making trial Balance.
i) One sided errors
These error affects Trial Balance.
If they are identified before making Trial Balance They can be
solved by giving an "Explanatory note".
errors which affects only 1 account can be
Balancing etc
Error of Casting
posting
carry forward
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NOTES
RECTIFICATION OF ERROR
They can be rectified through explanatory note by
Debiting the A/c in case of crediting the A/c in case of
short debit Short credit
Excess credit excess debit
Ex in Purchase Book, purchase has been undercast by 1000
Rectification → Purchase → Expense → Debit Balance
↓
In order to increase the Bal → Dr. it more by 1000
↓
Ans To undercasting of Purchase Book...... 1000
Ex Sales Book is overcast by 300
Rectification → Sales - Income - credit Balance
↓
overcast → excess credit balance
↓
in order to utilise → Dr. it by 300
↓
Ans To over casting of sales book ..... 200
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NOTES
RECTIFICATION OF ERROR
ii) 2 sided errors / Affect for more A/c
Rectification process
1. write wrong entry
2. reverse (1)
3. write correct entry
4.Pass Journal which will be the net effect of 3 and reverse of
wrong entry (2)
Ex Machinery purchased - 1,00,000 on credit from Ram has been
entered into purchase Book.
Rectification
wrong entry Reverse correct entry
Purchase Mohan Mach
to Mohan to purchase to Mohan
Machinery
To purchase
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RECTIFICATION OF ERROR
Ex→ Cash sales - 1,700 to gaurav is recorded as 7,100
Rec
wrong correct
cash 7,100 cash 1,700
to sales 7,100 to Sales 1,700
Sales 5,400
ANSWER to cash 5,400
Ex- B/R of 8,100 from Shyam was recorded in Bills payable
book.
wrong correct
shyam 8,100 B/R 8,100
To B/P 8,100 To shyam 8,100
B/P 8,100
ANSWER B/R 8,100
To shyam 16,200
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RECTIFICATION OF ERROR
How to understand
Mistake Rectification correct
look at mistake & correct
Now, Pass entry that would cancel mistake and leads to correct
entry .
EX - 10,000 salary paid to Ram, debited to his personal A/c.
Mistake
Ram 10,000 correct
To Cash 10,000 Salary 10,000
To cash 10,000
Salary 10,000
To ram 10,000
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NOTES
RECTIFICATION OF ERROR
2. Rectification After preparation of Trial Balance
(Before final A/c &)
2 sided errors one sided errors
↓ ↓
Since these errors They Affects trial Balance.
does not affects the Balance which means the difference. is
of Trial Balance placed under the head
↓ "Suspense A/c"
No. suspense A/c is created. ↓
↓ They will be rectified through
Their treatment is same as of Journal entry
Before preparing Trial Balance. using suspense A/c.
(A) Suspense A/c
It refers to the A/c under which the difference in trial Balance
is temporarily placed (until reason is not known)
It shows the net effect of one sided errors.
↓
After treatment of one sided errors, their should not be any
balance in suspense A/c
(if all the errors are rectified)
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RECTIFICATION OF ERROR
→ Ex → Sales book cast short by 1,000
→ without suspense A/c → with suspense A/c
By Short cast of sales Book.. 1000 Suspense A/c.......1000
To Sales A/c 1000
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RECTIFICATION OF ERROR CLASS 11
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