15 rectification of errors

15 rectification of errors

• 1.
  RECTIFICATION OF ERRORS IN HOW MANY CLASSES ERRORS ARE DIVIDED? Errors are divided into two classes:  Book keeping errors  Trial balance errors DEFINE BOOK KEEPING ERRORS. Errors which are incurred in the original book of account Journal & ledger. DEFINE ERROR OF TRIAL BALANCE ERRORS. Errors which are incurred in the preparation of trial balance are called trial balance errors. DEFINE ERROR OF OMISSION. If the transaction has been completely omitted from the books of account then it will be called error of omission. DEFINE ERROR OF COMMISSION. It means that the amount of a transaction has been wrongly recorded in the journal and the same wrong amount was also posted in the ledger e.g.  Posting of wrong amount in the ledger  Posting an amount to a wrong account DEFINE ERROR OF PRINCIPLE. Error which arises due to ignorance of the fundamental principles of accounting e.g. repair of furniture has been wrongly debited to furniture account DEFINE COMPENSATING ERRORS. Compensating errors means an error which is cancelled by another error of same amount in opposite direction DEFINE ERROR OF POSTING. If the transaction has been recorded in the journal but not posted in ledger then it will be called error of posting DEFINE ERROR OF CASTING. An error due to which total of an account is more or less recorded is known as error of casting.  Under cast  Overcast DEFINE UNDER CAST. An error due to which total of an account is less recorded e.g. sales book has been under cast by Rs.90 DEFINE OVER CAST. An error due to which total of an account is more recorded e.g. sales book has been over cast by Rs.90 DEFINE SUSPENCE ACCOUNT. It is an account in which we entered transactions which can’t be placed to their proper account due to lack of information PUNJAB COLLEGE OF COMMERCE PROF. HAFIZ MUHAMMAD NAWAZ PAGE 1