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Rectification of errors
The document discusses various types of errors in accounting and their impact on the trial balance, categorizing them as errors that do and do not affect it. It details methods for rectifying these errors, depending on whether they are detected before or after the trial balance is prepared. The document further provides examples and questions related to accounting errors and their rectification processes.
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Overview of errors in accounting affecting trial balances, types of errors, and methods for their rectification. Discusses errors that may affect or not affect the trial balance.
Details specific examples of errors, their incorrect entries, and the rectification processes used to correct them. Demonstrates practical accounting scenarios.
A quiz section with questions targeting understanding of errors in accounting, their impact on trial balances, and rectification methods.
Promotional content providing contact details and resources for further learning on accounting and error rectification.
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Rectification of errors
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- 2. Trial Balance(Verifies thearithmetical accuracy) may not Agree/tally Because of some errors committed while recording/Classification stage Errors are unintentional mistakes The trail may agree ( even after some errors) as some does not affect the trial balance
- 3. Errors can beof Two Types Errors affecting the Trial Balance Errors Doesn’t affecting the Trial Balance
- 4. Types of Errors(Sides/Impact Point of View) Single Sided Errors Double sided Errors Error with only one Errors with both the Side(Dr/Cr) of Entry sides Affect Trial Balance Do not affect Trial Balance
- 5. Principal Errors ( Rules,Concepts) Clerical Errors Omission Errors Compensatory Error Commission Errors
- 6. Transaction in contraventionof accounting principles Error in recognizing Capital/Revenue Transactions Does not affect the Trial Balance
- 7. Wages for constructionof building, debited to wages A/c Purchase of Fixed Asset debited to Purchases A/c Regular repairs of building, debited to Building A/C
- 8. Not considering atransaction Full Omission Partial Omission Both Aspects(Dr/Cr) Entry not posted During Recording During Posting (not entered in Journal at all) Not affect the Trial Balance Affect the Trial Balance.
- 9. Silly mistakes becauseof carelessness Errors may relate to a wrong amount, Correct amount in Wrong Account/Side While Journalizing, Ledger posting , Casting, Balancing or Carry forwarding May/ may not affect the Trial Balance Generally these affect Trial Balance
- 10. Effect of errorsis cancelled The second error compensate the impact of the first error Do not affect the Trial Balance
- 11. Rectification method dependson the Timing of detection of an error Before After Final Accounts Trail Balance (in next period) After Trial Balance (Before Final Accounts)
- 12. Double sided Errors-Rectified by a Rectifying Journal Entry Single Sided Errors Suspense A/c P&LAdj. A/c (After Tr. Bal.) (Next Period) Narration/ Rectification statement Without Suspense A/c (before Tr. Bal.)
- 13. Sales Book isUndercast by 1,500 If after Tr. Bal. Journal Entry : Debit : Suspense A/c Credit : Sales A/c If detected before Tr. Bal. Cr. Side(Sales A/c) - Undercasting of Sales book – 1,500
- 14. 1. ` 250written off as depreciation on Machinery has not been debited to Depreciation Account 2. Goods purchased of ` 300 have bee posted to the debit of Supplier X. 3. Purchase of `67 has been posted to the Trade Payables Account as ` 60.
- 15. Pass the wrongentry Reverse the Wrong Entry pass the correct entry pass the Rectification entry (comparing the second & third Entry).
- 16. The purchase ofmachinery for ` 2,000 has been entered in the purchases book Wrong Entry: Purchases Account Dr. 2,000 To Trade Payable 2,000 Reverse Entry: Trade Payable Dr. 2,000 To Purchases Account 2,000 Correct Entry: Machinery Account Dr. 2,000 To Trade Payable 2,000 Rectifying Entry: Machinery Account Dr. 2,000 To Purchases Account 2,000
- 17. Rectifications done through “P&LAdjustment A/c/Prior Period Items A/c (Error’s ultimate effect on P&L A/c is considered)” Wages of ` 2,500 paid for the installation of machinery charged to wages account(detected next year) Rectification entry Machinery Account Dr. 2,500 To Profit and Loss Adjustment Account 2,500
- 18. Q.1. Errors ofcommission do not permit Correct totalling of the balance sheet Correct totalling of the trial balance The trial balance to agree None of the above C
- 19. Q.2. If depreciationis excess charged by Rs.500 and closing stock is understated by Rs.500, the net profit will be _____ due to these errors Understated by Rs.500 Understated by Rs.1000 Overstated by Rs.1000 No effect B
- 20. Q.3. Sale ofold furniture is erroneously entered in sales book. Rectification entry will be: Debit Sales A/c, Credit Furniture A/c Debit Furniture A/c, Credit Sales A/c Debit Debtor A/c, Credit Furniture A/c Debit Sales A/c, Credit Debtor A/c A
- 21. Q.4. Which ofthe following errors will affect the trial balance? Repairs to building wrongly debited to Building A/c Total of Purchase Journal by ` 1,000 short Freight paid on new machinery debited to Freight A/c None of the three B
- 22. Q.5. In casetrial balance does not agree, difference is put to Suspense A/c Drawing A/c Capital A/c Trading A/c A
- 23. Q.6. On purchasesof old furniture, the amount spent on its repair should be debited to Repair A/c Furniture A/c Cash A/c Bank A/c B
- 24. Q.7. Goods worthRs.272 returned by Lala passed through the books as Rs.722. The rectification entry is – Lala will be debited by Rs.450 Lala will be debited by Rs.272 Lala will be credited by Rs.722 Lala will be credited by Rs.272 A
- 25. Q.8. Commission paidto Mr. Dixit Rs.225 was posted twice to Commission account. The rectification is done by – Writing 'Error in Posting' Rs.225 on credit side of Mr. Dixit A/c in Ledger Passing a rectification entry in Journal Proper crediting Commission A/c by Rs.225 Writing 'Error in Posting' Rs.225 on credit side of Commission A/c in Ledger Passing a rectification entry in Journal Proper debiting Commission A/c by Rs. 225 C
- 26. Q.9. Rectification ofwhich types of errors requires opening of suspense A/c. Errors of principle Complete omission Partial omission Errors of commission C
- 27. Q.10 Rs. 51000received from Mohan but credited to Sohan A/c. This is an error of __. Errors of principle Omission Commission Compensating C
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